Blue Mountain Products manufactures and sells a variety of camping products. Recently, the company opened a new plant to manufacture a lightweight, self-standing tent. Cost and sales data for the first month of operations (June 2016) are as follows:

The tent sells for $150. Management is interested in the opening month's results and has asked for an income statement.
Instructions
(a) Assuming the company uses absorption costing:
1. Calculate the manufacturing cost per unit.
2. Prepare an absorption-costing income statement for the month of June 2016.
(b) Assuming the company uses variable costing:
1. Calculate the manufacturing cost per unit.
2. Prepare a variable-costing income statement for the month of June 2016.
(c) Reconcile the difference in net income between the absorption-costing and variable-costing methods.
(d) Assuming the company uses throughput costing:
1. Calculate the manufacturing cost per unit.
2. Prepare a throughput-costing income statement for the month of June 2016.
(e) Reconcile the difference in net income between the variable-costing and through put-costing methods.

Transcribed Image Text:

Manufacturing costs Fixed overhead Variable overhead Direct labour Direct material $200,000 $4 per tent $16 per tent $40 per tent 0 tents Beginning inventory Tents produced Tents sold Selling and administrative costs 10,000 9,000 Fixed Variable $400,000 $6 per tent sold