Information for Alta Products Ltd. is provided in P8-29A.
Instructions
(a) Assume the company uses normal costing and uses the budgeted volume of 2,500 units to allocate the fixed overhead rate rather than the actual production volume of 2,000 units. The company expenses production volume variance to cost of goods sold in the accounting period in which it occurs. Do the following:
1. Calculate the manufacturing cost per unit.
2. Prepare a normal-costing income statement for the month ended August 31, 2016.
(b) Reconcile the difference in net income between the absorption-costing and normal-costing methods.