SpongeFun Products manufactures and sells a variety of swimming products. Recently, the company opened a new plant to manufacture a lightweight, inflatable boat. Cost and sales data for 2016 are shown below:

The boat sells for $60. Management is interested in the first year's results and has asked for an income statement.
Instructions
(a) Assuming the company uses absorption costing:
1. Calculate the production cost per unit.
2. Prepare an income statement for 2016.
(b) Assuming the company uses variable costing:
1. Calculate the production cost per unit.
2. Prepare an income statement for 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 2016.
(e) Reconcile the difference in net income between the variable-costing and through put-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