Comprehensive Full- Absorption and Variable Costing Comparison: Kensington Company manufactures a single product with the following costs:

Beginning inventory is valued at $4 per unit under full-absorption costing, and at $3 per unit under variable costing. Unit costs have been the same since inception of the company. If sales are greater than production, assume that there is sufficient in- ventory at normal production cost to take up the slack. Any over- or underapplied overhead is charged to cost of goods sold for this period. The president of Kensington wants an analysis on the effect of variations in sales and production units. To help you he has included a chart for you to complete (all numbers in thousands).

Required:

a. Complete the chart.

b. Comment on the results.

Transcribed Image Text:

Selling price Variable manufacturing costs (direct materials and direct labor) Fixed manufacturing costs, based on a normal production volume of 100,000 units per month (all manufacturing overhead is fixed) Marketing and administrative costs (all fixed) 5.00 per unit 3.00 per unit 1.00 per unit 50,000 per month