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		$86
Variable manufacturing overhead		$6
Fixed manufacturing overhead costs (total)		$254,200
Selling and administrative costs:
Variable		13	% of sales
Fixed (total)		$161,000

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 $260 each.

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

Units produced	4,100
Units sold	3,300

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)Gross marginCost of goods soldSalesNet operating income (loss)Selling and administrative expenses	$
(Click to select)Gross marginCost of goods soldSelling and administrative expensesNet operating income (loss)Sales
(Click to select)SalesSelling and administrative expensesNet operating income (loss)Gross marginCost of goods sold
(Click to select)Selling and administrative expensesNet operating income (loss)SalesCost of goods soldGross margin
(Click to select)SalesGross marginSelling and administrative expensesCost of goods soldNet operating income (loss)	$

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)Fixed manufacturing overheadVariable cost of goods soldFixed selling and administrative expensesContribution marginNet operating income (loss)Variable selling and administrative expensesSales		$
Variable expenses:
(Click to select)Contribution marginNet operating income (loss)Fixed manufacturing overheadVariable selling and administrative expensesVariable cost of goods soldFixed selling and administrative expensesSales	$
(Click to select)Variable cost of goods soldVariable selling and administrative expensesFixed selling and administrative expensesSalesNet operating income (loss)Fixed manufacturing overheadContribution margin
(Click to select)Contribution marginVariable selling and administrative expensesVariable cost of goods soldNet operating income (loss)SalesFixed manufacturing overheadFixed selling and administrative expenses
Fixed expenses:
(Click to select)SalesFixed selling and administrative expensesVariable cost of goods soldFixed manufacturing overheadNet operating income (loss)Variable selling and administrative expensesContribution margin
(Click to select)SalesContribution marginFixed manufacturing overheadNet operating income (loss)Variable cost of goods soldFixed selling and administrative expensesVariable selling and administrative expenses
(Click to select)Variable cost of goods soldNet operating income (loss)Fixed selling and administrative expensesVariable selling and administrative expensesFixed manufacturing overheadSalesContribution margin		$

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)	$