A business operated at 100% of capacity during its first month, with the following results:

Sales (98 units)		$470,400
Production costs (122 units):
Direct materials	$63,303
Direct labor	16,163
Variable factory overhead	28,284
Fixed factory overhead	26,938	134,688
Operating expenses:
Variable operating expenses	$5,233
Fixed operating expenses	4,688	9,921

The amount of gross profit that would be reported on the absorption costing income statement is

a.$470,278

b.$356,975

c.$362,208

d.$352,287

On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:

		Units
Production		50,000
Sales ($18 per unit)		(42,000)
Inventory, January 31		8,000
Manufacturing costs:
Variable		$575,000
Fixed		80,000
Total		$655,000
Selling and administrative expenses:
Variable		$35,000
Fixed		10,500
Total		$45,500

Question Content Area

a. Prepare an income statement using absorption costing.

Townsend Co. Absorption Costing Income Statement For the Month Ended January 31

Cost of goods manufacturedEnding inventoryInterest revenuesSalesVariable selling and administrative expenses		$- Select -
Cost of goods sold:
Advertising expensesCost of goods manufacturedCost of goods soldGross profitSelling and administrative expenses	$- Select -
Advertising expensesCost of goods soldEnding inventoryGross profitSelling and administrative expenses	- Select -
Advertising expensesCost of goods manufacturedEnding inventoryTotal cost of goods soldVariable selling and administrative expenses		- Select -
Advertising expensesCost of goods manufacturedEnding inventoryGross profitVariable selling and administrative expenses		$- Select -
Advertising expensesCost of goods manufacturedEnding inventorySelling and administrative expensesVariable selling and administrative expenses		- Select -
Operating income		$fill in the blank 93cac80edff6f9d_13

Question Content Area

b. Prepare an income statement using variable costing.

Townsend Co. Variable Costing Income Statement For the Month Ended January 31

Ending inventoryFixed manufacturing costsSalesVariable cost of goods manufacturedWages expense		$- Select -
Variable cost of goods sold:
Contribution marginManufacturing marginUtilities expenseVariable cost of goods manufacturedVariable cost of goods sold	$- Select -
Contribution marginEnding inventoryManufacturing marginUtilities expenseVariable cost of goods sold	- Select -
Ending inventoryFixed manufacturing costsTotal variable cost of goods soldUtilities expenseVariable cost of goods manufactured		- Select -
Ending inventoryFixed manufacturing costsManufacturing marginVariable cost of goods manufacturedWages expense		$- Select -
Ending inventoryFixed manufacturing costsVariable cost of goods manufacturedVariable selling and administrative expensesWages expense		- Select -
Contribution marginEnding inventoryFixed manufacturing costsVariable cost of goods manufacturedWages expense		$- Select -
Fixed costs:
Contribution marginFixed manufacturing costsManufacturing marginVariable cost of goods soldWages expense	$- Select -
Contribution marginFixed selling and administrative expensesManufacturing marginVariable cost of goods soldWages expense	- Select -	- Select -
Operating income		$fill in the blank 44f78f025ffafbb_20

If variable manufacturing costs are $15 per unit and total fixed manufacturing costs are $318,500, what is the manufacturing cost per unit if:

a. 4,900 units are manufactured and the company uses the variable costing concept? $fill in the blank 1

b. 6,500 units are manufactured and the company uses the variable costing concept? $fill in the blank 2

c. 4,900 units are manufactured and the company uses the absorption costing concept? $fill in the blank 3

d. 6,500 units are manufactured and the company uses the absorption costing concept? $fill in the blank 4