Stroemann Manufacturing Co. has determined the cost of manufacturing a unit of product as follows, based on normal production of 50,000 units per year:

Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...$ 8

Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 6

Variable factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 5

Fixed factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 4

Total cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23

Operating statistics for October and November include the following:

The selling price is $30 per unit. There were no inventories on October 1, and there is no work in process on November 30.

Required:

Prepare comparative income statements for each month under each of the following:

1. Absorption costing (include under- or overapplied fixed overhead).

2. Variablecosting.

Transcribed Image Text:

October November 4,000 5,000 $10,000 Units 6,000 Units sold... Selling and administrative expenses (all fixed)$10,000 5,000