Question
Absorption and Variable Costing Problem The first month of operations ended Nov 30, 2016. Flexo Company produced 47,200 hammers of which 39,800 were sold. Operating
Absorption and Variable Costing Problem
The first month of operations ended Nov 30, 2016. Flexo Company produced 47,200
hammers of which 39,800 were sold. Operating data for the month are as follows:
Sales: $325,000
Manufacturing costs:
Direct materials: $90,000
Direct labor: $28,000
Variable manufacturing costs: $15,500
Fixed manufacturing costs: $11,000
=$144,500
Selling and administrative expenses:
Variable: $19,000
Fixed: $11,000
=$30,000
1. How much is the Gross Profit (Gross Margin) under the absorption costing method?
2. How much is the Net Income under the absorption costing method?
3. How much is the Contribution Margin under the variable costing method?
4. How much is the Net Income under the variable costing method?
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