Answered: Amex Company, which has woolen scarves…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 3E: Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began...

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Question

Amex Company, which has woolen scarves to produce, has provided the following data concerning its most recent month of operations:

Selling price TK. 100

Units in beginning inventory 200 Units produced 2,800 Units sold 2,600 Units in ending inventory 400

Variable costs per unit:

Direct materials TK.38

Direct labor TK.21

Variable manufacturing overhead TK.5

Variable selling and administrative TK.6

Fixed costs:

Fixed manufacturing overhead TK.1,60,000 Fixed selling and

administrative TK.1,25,000

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Required:

a) What is the unit product cost for the month under variable costing?
b) What is unit product cost for the month under absorption costing?
c) Prepare an income statement for the month using the contribution format and the variable costing method.
d) Prepare an income statement for the month using the absorption costing method.

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