Beginning inventory 0 Units produced 10,000 Units sold 8,000 Selling price per unit $ 75 Selling and administrative expenses: Variable per unit $ 6 Fixed (per month) $ 200,000 Manufacturing costs: Direct materials cost per unit $ 20 Direct labor cost per unit $ 8 Variable manufacturing overhead cost per unit $ 2 Fixed manufacturing overhead cost (per month) $ 100,000 Management is anxious to assess the profitability of the new camp cot during the month of May. Required: 1. Assume that the company uses absorption costing. a. Determine the unit product cost. b. Prepare an income statement for May. 2. Assume that the company uses variable costing. a. Determine the unit product cost. b. Prepare a contribution format income statement for May.
Beginning inventory 0 Units produced 10,000 Units sold 8,000 Selling price per unit $ 75 Selling and administrative expenses: Variable per unit $ 6 Fixed (per month) $ 200,000 Manufacturing costs: Direct materials cost per unit $ 20 Direct labor cost per unit $ 8 Variable manufacturing overhead cost per unit $ 2 Fixed manufacturing overhead cost (per month) $ 100,000 Management is anxious to assess the profitability of the new camp cot during the month of May. Required: 1. Assume that the company uses absorption costing. a. Determine the unit product cost. b. Prepare an income statement for May. 2. Assume that the company uses variable costing. a. Determine the unit product cost. b. Prepare a contribution format income statement for May.
Accounting
27th Edition
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Chapter21: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 21.28EX: Appendix Absorption costing income statement On June 30, the end of the first month of operations,...
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Question
| Beginning inventory | 0 | |
| Units produced | 10,000 | |
| Units sold | 8,000 | |
| Selling price per unit | $ | 75 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 6 |
| Fixed (per month) | $ | 200,000 |
| Direct materials cost per unit | $ | 20 |
| Direct labor cost per unit | $ | 8 |
| Variable manufacturing overhead cost per unit | $ | 2 |
| Fixed manufacturing overhead cost (per month) | $ | 100,000 |
Management is anxious to assess the profitability of the new camp cot during the month of May.
Required:
1. Assume that the company uses absorption costing.
a. Determine the unit product cost.
b. Prepare an income statement for May.
2. Assume that the company uses variable costing.
a. Determine the unit product cost.
b. Prepare a contribution format income statement for May.
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