Question

Bracey Company manufactures and sells one product. The following information pertains to the company's first year of operations: $ 28 points Variable cost per unit: Direct materials Fixed costs per year: Direct labor Fixed manufacturing overhead Fixed selling and administrative expenses $ 367,500 $ 389,550 $ 66,000 eBook The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Bracey produced 24,500 units and sold 22,700 units. The selling price of the company's product is $65 per unit. Print Required: 1. Assume the company uses super-variable costing: a. Compute the unit product cost for the year. b. Prepare an income statement for the year. References 2. Assume the company uses a variable costing system that assigns $15.00 of direct labor cost to each unit produced: a. Compute the unit product cost for the year. b. Prepare an income statement for the year. 3. Assume the company uses an absorption costing system that assigns $15.00 of direct labor cost and $15.90 of fixed manufacturing overhead cost to each unit produced: a. Compute the unit product cost for the year. b. Prepare an income statement for the year. 4a. Reconcile the difference between the super-variable costing and variable costing net operating incomes. 4b. Reconcile the difference between the super-variable costing and absorption costing net operating incomes. Complete this question by entering your answers in the tabs below. Reg 1A Reg 13 Reg 2A Reg 28 Reg 3А Reg 38 Req 4A Reg 4B Reconcile the difference between the super-variable costing and absorption costing net operating incomes. $ 16,850 Super-variable costing net operating income (loss) Add: Direct labor and fixed manufacturing overhead cost deferred in inventory under absorption costing Absorption costing net operating income (loss) $ 16,850

Answer 1

1A) Unit product cost under super-variable costing= Direct materials= $28

1B)

Bracey Company
Super-Variable Costing Income Statement
Sales (22700*$65)		$1475500
Variable cost of goods sold (22700*$28)		(635600)
Contribution margin		839900
Fixed expenses:
Fixed manufacturing overhead	389550
Fixed selling and administrative expenses	66000
Direct labor	367500
		(823050)
Net operating income		$16850

2A) Unit product cost under variable costing= Direct materials+Direct labor

= $28+15= $43

2B)

Bracey Company
Variable Costing Income Statement
Sales (22700*$65)		$1475500
Variable cost of goods sold (22700*$43)		(976100)
Contribution margin		499400
Fixed expenses:
Fixed manufacturing overhead	389550
Fixed selling and administrative expenses	66000
		(455550)
Net operating income		$43850

3A) Unit product cost under absorption costing

Direct materials	$28.00
Direct labor	15.00
Fixed manufacturing overhead	15.90
Total unit product cost	$58.90

3B)

Bracey Company
Absorption Costing Income Statement
Sales (22700*$65)	$1475500
Cost of goods sold (22700*$58.90)	(1337030)
Gross margin	138470
Selling and administrative expenses	(66000)
Net operating income	$72470

4A)

Super-variable costing net operating income (loss)	$16850
Add: Direct labor costs deferred in inventory under variable costing (24500-22700)*$15	27000
Variable costing net operating income (loss)	$43850

4B)

Super-variable costing net operating income (loss)	$16850
Add: Direct labor cost and fixed manufacturing costs deferred in inventory under absorption costing (24500-22700)*$30.90	55620
Absorption costing net operating income (loss)	$72470

Direct labor and fixed manufacturing cost per unit= $15.00+15.90= $30.90