Information for SpongeFun Products is provided in P8-36B.

Instructions
(a) Assume the company uses normal costing and uses the budgeted volume of 60,000 units to allocate the fixed overhead rate rather than the actual production volume of 50,000 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 2016.
(b) Reconcile the difference in net income between the absorption-costing and normal-costing methods.

Transcribed Image Text:

Manufacturing costs Fixed overhead costs Variable overhead Direct labour Direct materials $150,000 $5 per boat $10 per boat $10 per boat 0 boats Beginning inventory Boats produced Boats sold Selling and administrative costs 50,000 46,000 Fixed Variable 300,000 $8 per boat sold