Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials S 6 Direct labor 10 Variable manufacturing overhead 4 Variable selling and administrative 2 Total variable cost per unit $ 22 Fixed costs per month: Fixed manufacturing overhead $ 60,000 Fixed selling and administrative 163,000 Total fixed cost per month $223,000 The product sells for $51 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 15, 000 11,000 August 15,000 19,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July August Sales S 561,000 $ 969,000 Cost of goods sold 264,000 456,000 Gross margin 297,000 513,000 Selling and administrative expenses 185,000 201,000 Net operating income $ 112,000 $312,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes.
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials S 6 Direct labor 10 Variable manufacturing overhead 4 Variable selling and administrative 2 Total variable cost per unit $ 22 Fixed costs per month: Fixed manufacturing overhead $ 60,000 Fixed selling and administrative 163,000 Total fixed cost per month $223,000 The product sells for $51 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 15, 000 11,000 August 15,000 19,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July August Sales S 561,000 $ 969,000 Cost of goods sold 264,000 456,000 Gross margin 297,000 513,000 Selling and administrative expenses 185,000 201,000 Net operating income $ 112,000 $312,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...
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