Question

50,000 45,000 $76 Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (total) Manufacturing costs Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (total) $3 $ 567,000 $15 $7 $3 $ 900,000 Because the new antenna is unique in design, management is anxious to see how profitable it will be and has asked that an income statement be prepared for the month. Required: 1. Assume that the company uses absorption costing. a. Determine the unit product cost. (Omit the "S" sign in your response.) Unit product cost 43 $ b. Prepare an income statement for the month. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "S" sign in your response.) Absorption Costing Income Statement Sales Cost of goods sold $ 3420000 Gross margin Selling and administration expenses

Answer 1

1-b)

Absorption Costing Income Statement
Sales (45000*$76)	3420000
Cost of goods sold (45000*$43)	-1935000
Gross margin	1485000
Selling and administration expenses ($3*45000+$567000)	-702000
Net operating income	783000

2-b)

Variable Costing Income Statement
Sales (45000*$76)		3420000
Variable expenses
Cost of goods sold (45000*$25)	1125000
Variable selling and administrative expenses (45000*$3)	135000	-1260000
Contribution margin		2160000
Fixed expenses:
Fixed manufacturing overhead	900000
Fixed selling and administration	567000	-1467000
Net operating income		693000