a. Compute the unit product cost under both absorption and variable costing. b. Prepare an income statement for the year using absorption costing.( c. Prepare a contribution format income statement for the year using variable costing.
Q4 Moona Inc. produces Mobile phones. Information of the company's operations last year appear below:
|
Fixed cost: |
|
|
Fixed Manufacturing |
Rs 40,000 |
|
Fixed Selling & Administrative |
Rs 60,000 |
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|
|
|
Selling Price per unit |
Rs 100 |
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|
|
|
Variable cost per unit: |
|
|
Direct Materials |
Rs 30 |
|
Direct labor |
Rs 10 |
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Variable Manufacturing Overhead |
Rs 5 |
|
Variable Selling & Administrative |
Rs 2 |
|
|
|
|
Units In beginning Inventory |
0 |
|
Units Produced |
2000 |
|
Units sold |
1900 |
Required:
a. Compute the unit product cost under both absorption and variable costing.
b. Prepare an income statement for the year using absorption costing.(
c. Prepare a contribution format income statement for the year using variable costing.
d.Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year.
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