#26

Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 42,000 units and sold 34,000 units at a price of $120 per unit.

Manufacturing costs
Direct materials per unit	$	48
Direct labor per unit	$	18
Variable overhead per unit	$	6
Fixed overhead for the year	$	420,000
Selling and administrative cost
Variable selling and administrative cost per unit	$	12
Fixed selling and administrative cost per year	$	110,000

26.

value: 2.00 points

Required information

1a.

Assume the company uses absorption costing. Determine its product cost per unit.

Per unit product cost using:	Absorption costing
Cost per unit

Hints

1b.

Assume the company uses absorption costing. Prepare its income statement for the year under absorption costing.

COOL SKY
Absorption Costing Income Statement
Net income (loss)

2a.

Assume the company uses variable costing. Determine its product cost per unit.

Per unit product cost using:	Variable costing
Cost per unit

2b.

Assume the company uses variable costing. Prepare its income statement for the year under variable costing.

COOL SKY
Variable Costing Income Statement
Net income (loss)