Question
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 6 Direct labor
Denton Company manufactures and sells a single product. Cost data for the product are given:
Variable costs per unit: | ||||
Direct materials | $ | 6 | ||
Direct labor | 9 | |||
Variable manufacturing overhead | 2 | |||
Variable selling and administrative | 2 | |||
Total variable cost per unit | $ | 19 | ||
Fixed costs per month: | ||||
Fixed manufacturing overhead | $ | 81,000 | ||
Fixed selling and administrative | 160,000 | |||
Total fixed cost per month | $ | 241,000 | ||
The product sells for $48 per unit. Production and sales data for July and August, the first two months of operations, follow:
Units Produced | Units Sold | |
July | 27,000 | 23,000 |
August | 27,000 | 31,000 |
The companys Accounting Department has prepared the following absorption costing income statements for July and August:
July | August | ||||
Sales | $ | 1,104,000 | $ | 1,488,000 | |
Cost of goods sold | 460,000 | 620,000 | |||
Gross margin | 644,000 | 868,000 | |||
Selling and administrative expenses | 206,000 | 222,000 | |||
Net operating income | $ | 438,000 | $ | 646,000 | |
Required:
1. Determine the unit product cost under:
a. Absorption costing.
b. Variable costing.
2. Prepare contribution format variable costing income statements for July and August.
ormat variable costing income statements for July and August.
|
use the above table as it is to prepare the income statement please
3. Reconcile the variable costing and absorption costing net operating incomes.
|
use the above table as it is please to reconcile
thank you
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