Question

6. (20 Points) Lukin Corporation reports the following first year production cost information: Units produced Units sold Sales price Direct labor Direct materials Variable overhead Fixed overhead Operating expenses 62,000 units 59,000 units $350 per unit $41 per unit $15 per unit $9,300,000 in total $4,340,000 in total $1,000,000 a. Compute production cost per unit under variable costing. b. Compute production cost per unit under absorption costing. c. Determine the net income using variable costing. d. Determine the net income using absorption costing.

Answer 1

Unit Produced	62000
Unit Sold	59000
Sale price	350
Direct labour	41
Direct material	15
Variable overhead	9300000
Fixed Overhead	4340000
Operating expense	1000000
Variable cost
Direct labour	25,42,000	41*62000
Direct material	9,30,000	15*62000
Variable overhead	93,00,000
Operating expense	10,00,000
Total Variable cost	13772000
Unit Produced	62000
Variable cost per unit	222.13
Absorption costing
Direct labour	25,42,000	41*62000
Direct material	9,30,000	15*62000
Variable overhead	93,00,000
Operating expense	10,00,000
Fixed Overhead	4340000
Total absorption cost	18112000
Unit Produced	62000
Absorption cost per unit	292.13
Net Income under a variable cost
Sale price	2,06,50,000	59000*350
Total Variable cost	1,37,72,000	59000*350
	68,78,000
Net Income under Absorption cost
Sale price	2,06,50,000
Total Absorption costing	1,81,12,000
	25,38,000