Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Denton Company manufactures and sells a single product. Cost data for the product are given: $ 3 10 Variable costs per unit: Direct materials Direct
Denton Company manufactures and sells a single product. Cost data for the product are given: $ 3 10 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month $ 19 $ 105,000 175,000 $ 280,000 The product sells for $55 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced 21,000 21,000 Units Sold 17,000 25,000 July August The company's Accounting Department has prepared the following absorption costing income statements for July and August: Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income July $ 935,000 374,000 561,000 209,000 $ 352,000 August $ 1,375,000 550,000 825,000 225,000 $ 600,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the unit product cost under: (a) Absorption costing, (b) Variable costing. a. Absorption costing b. Variable costing Unit Product Cost $ $ 17 Prepare variable costing income statements for July and August. Denton Company Variable Costing Income Statement July 935,000 August $ 1,375,000 $ Sales Variable expenses: Variable cost of goods sold Variable selling and administrative expenses 0 935,000 0 1,375,000 Total variable expenses Gross margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses Total fixed expenses Net operating income (loss) $ 935,000 $ 1,375,000 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Reconcile the variable costing and absorption costing net operating incomes. (Enter any losses or deductions as a negative value.). Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes July August 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)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started