EXERCISE 6A-2 Super-Variable Costing and Variable Costing Unit Product Costs and Income Statements LO6-2, LO6-6
Lyons Company manufactures and sells one product. The following information pertains to the company's first year of operations:
Variable cost per unit: | ||
Direct materials | $13 | |
Fixed costs per year: | ||
Direct labour | $750,000 | |
Fixed manufacturing overhead | $420,000 | |
Fixed selling and administrative expenses | $110,000 | |
The company does not incur any variable
Required:
1. Assume the company uses super-variable costing:
a. Compute the unit product cost for the year.
b. Prepare an income statement for the year.
2. Assume the company uses a variable costing system that assigns $12.50 of direct labor cost to each unit produced.
a. Compute the unit product cost for the year.
b. Prepare an income statement for the year.
3. Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net operating incomes.
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MANAGERIAL ACCOUNTING (LL)
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