Advance Products, Inc., has just organized a new division to manufacture and sell specially designed tables using select hardwoods for personal computers. The divisions monthly costs are shown in the schedule below:

Manufacturing costs:
Variable costs per unit:
Direct materials		$84
Variable manufacturing overhead		$4
Fixed manufacturing overhead costs (total)		$270,900
Selling and administrative costs:
Variable		9	% of sales
Fixed (total)		$164,000

Advance Products regards all of its workers as full-time employees and the company has a long-standing no-layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labor costs in its fixed manufacturing overhead. The tables sell for $350 each.

During the first month of operations, the following activity was recorded:

Units produced	4,300
Units sold	3,500

Required:

1.	Compute the unit product cost under absorption costing and variable costing.

		Unit Product Cost
a.	Absorption costing
b.	Variable costing

2.	Prepare an income statement for the month using absorption costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Absorption Costing Income Statement
(Click to select)Selling and administrative expensesCost of goods soldSalesNet operating income (loss)Gross margin	$
(Click to select)Selling and administrative expensesGross marginCost of goods soldNet operating income (loss)Sales
(Click to select)Cost of goods soldSelling and administrative expensesSalesNet operating income (loss)Gross margin
(Click to select)Gross marginCost of goods soldSelling and administrative expensesSalesNet operating income (loss)
(Click to select)Gross marginSalesCost of goods soldNet operating income (loss)Selling and administrative expenses	$

3.	Prepare a contribution format income statement for the month using variable costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Variable Costing Income Statement
(Click to select)Net operating income (loss)Variable selling and administrative expensesFixed selling and administrative expensesVariable cost of goods soldContribution marginSalesFixed manufacturing overhead		$
Variable expenses:
(Click to select)Fixed manufacturing overheadNet operating income (loss)SalesContribution marginVariable selling and administrative expensesFixed selling and administrative expensesVariable cost of goods sold	$
(Click to select)Contribution marginFixed manufacturing overheadSalesNet operating income (loss)Variable cost of goods soldFixed selling and administrative expensesVariable selling and administrative expenses
(Click to select)Fixed manufacturing overheadVariable selling and administrative expensesNet operating income (loss)SalesContribution marginFixed selling and administrative expensesVariable cost of goods sold
Fixed expenses:
(Click to select)SalesNet operating income (loss)Fixed manufacturing overheadContribution marginVariable selling and administrative expensesVariable cost of goods soldFixed selling and administrative expenses
(Click to select)Fixed selling and administrative expensesNet operating income (loss)Variable cost of goods soldVariable selling and administrative expensesSalesFixed manufacturing overheadContribution margin
(Click to select)Variable cost of goods soldSalesContribution marginFixed selling and administrative expensesNet operating income (loss)Fixed manufacturing overheadVariable selling and administrative expenses		$

5.	Reconcile the absorption costing and variable costing net operating incomes in (2) and (3) above. (Loss amounts and amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.)

Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
Variable costing net operating income (loss)	$
Add (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costing
Absorption costing net operating income (loss)	$