Beta Electronics

Scenario: Analyze Costing Methods

Data:

• Production Data:
  • Units Produced: 5,000 units
  • Sales Price per Unit: $100

• Cost Information:
  • Direct Materials: $20 per unit
  • Direct Labor: $10 per unit
  • Variable Overhead: $5 per unit
  • Fixed Manufacturing Overhead: $30,000

Requirements:

1. Calculate the total manufacturing cost per unit under absorption costing.
2. Calculate the total manufacturing cost per unit under variable costing.
3. Prepare an income statement using absorption costing.
4. Prepare an income statement using variable costing.
5. Discuss the differences in reported profits between absorption and variable costing for Beta Electronics.