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		$90
Variable manufacturing overhead		$2
Fixed manufacturing overhead costs (total)		$231,800
Selling and administrative costs:
Variable		12	% 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 $250 each.

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

Units produced	3,800
Units sold	3,000

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)SalesSelling and administrative expensesNet operating income (loss)Cost of goods soldGross margin	$
(Click to select)SalesGross marginNet operating income (loss)Selling and administrative expensesCost of goods sold
(Click to select)SalesSelling and administrative expensesCost of goods soldNet operating income (loss)Gross margin
(Click to select)Gross marginSalesNet operating income (loss)Cost of goods soldSelling and administrative expenses
(Click to select)Gross marginSelling and administrative expensesSalesNet operating income (loss)Cost of goods sold	$

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)SalesFixed manufacturing overheadVariable selling and administrative expensesFixed selling and administrative expensesVariable cost of goods soldNet operating income (loss)Contribution margin		$
Variable expenses:
(Click to select)Net operating income (loss)Variable cost of goods soldVariable selling and administrative expensesSalesFixed manufacturing overheadContribution marginFixed selling and administrative expenses	$
(Click to select)Variable cost of goods soldFixed selling and administrative expensesNet operating income (loss)Contribution marginFixed manufacturing overheadSalesVariable selling and administrative expenses
(Click to select)Fixed selling and administrative expensesFixed manufacturing overheadVariable cost of goods soldContribution marginNet operating income (loss)SalesVariable selling and administrative expenses
Fixed expenses:
(Click to select)Variable selling and administrative expensesFixed selling and administrative expensesFixed manufacturing overheadContribution marginNet operating income (loss)SalesVariable cost of goods sold
(Click to select)Contribution marginNet operating income (loss)Variable selling and administrative expensesFixed manufacturing overheadVariable cost of goods soldFixed selling and administrative expensesSales
(Click to select)Fixed manufacturing overheadVariable cost of goods soldVariable selling and administrative expensesSalesFixed selling and administrative expensesContribution marginNet operating income (loss)		$

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)	$