Question

CH 06 Ex 6-9 Saved Part 1 of 4 Required information Exercise 06-9 Income statement under absorption costing and variable costing LO P1, P2 [The following information applies to the questions displayed below.] points Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 46,000 units and sold 38,000 units at a price of $150 per unit. Skipped Manufacturing costs Direct materials per unit Direct labor per unit Variable overhead per unit Fixed overhead for the year Selling and administrative costs Variable selling and administrative cost per unit Fixed selling and administrative cost per year ta ta ta ta eBook $ 598,000 11 $ 105,000 Hint Ask Exercise 06.9 Part 1a Print 1a. Assume the company uses absorption costing. Determine its product cost per unit. Per unit product cost using: Absorption costing References Total cost per unit

Answer 1

1a PER UNIT PRODUCT COST direct materials direct labor variable mfg oH fixed manufacturing OH unit product cost Absorption costing 66.00 25.00 9.00 13.00 113.00

1b 5700000 COOL SKY company Absorption costing income statement for the year ended sales less cost of goods sold direct matrial 2508000 direct labor 950000 variable OH 342000 fixed OH 494000 total cost of goods sold gross margin variable selling and adm expenses 418000 fixed selling and adm expenses 1,05,000 total selling and adm expenses net operating income (loss) 4294000) 1406000 523000 883000

2a PER UNIT PRODUCT COST direct materials direct labor variable mfg oH unit product cost variable costing 66.00 25.00 9.00 100.00

5700000 COOL SKY company income statement - variable costing for the year end sales less variable cost direct matrial 2508000 direct labor 950000 variable OH 342000 variable selling costs 418000 total variable costs contribution margin less fixed costs fixed manufacturing costs 5,98,000 fixed selling 1,05,000 total fixed cost net operating income (loss) 4218000 1482000 7,03,000 779000