Excel File Edit View Insert Format Tools Data Window Help AutoSave OFF DCh 6 Homework Home Insert Draw Page Layout Formulas Data Review View Developer ab v Calibri 14 A A Condit Format Paste B I . U v Number Cell Sty A1 4 X v fx Chapter 6 Homework A B C D E F G Chapter 6 Homework Check Your Work Clear Solution N My Company produced 21,000 units during February. Direct material costs are $5 per unit and direct labor cost is $4 per unit. Variable overhead is applied at a rate of $6 per unit and fixed overhead is $52500 per month. Sales commissions are $7 per unit sold. Sales salaries are $71,000 Lock Numbers in Place monthly and fixed administrative expenses are $86,000 per month. W Required: a. Calculate the production cost per unit under variable and absorption costing. b. Prepare an income statement under variable and absorption costing for February 6 if all 21,000 units produced were sold for $34 each. c. During March, My Company produced 21,000 units and sold 15,000 units. Prepare an income statement under variable and absorption costing for March if the sales price remained at $34 each. d. Is the February net income difference under variable and absorption costing? Why or why not? What about March, is the net income different? Why or why not? Show how you would reconcile net income under both methods for February and March. 9 10 Round product cost per unit to the nearest cent (2 decimals) 11 (a) Calculate product costs 12 Variable Absorption 13 14 15 16 Hint? 17 Product Cost per unit 18 Product cost check: 19 20 (b) Prepare February Income Statements 21 (USE APPROPRIATE FORMATS AND LABEL EVERY NUMBER!) nau Company Homework Settings + Select destination and press ENTER or choose PasteExcel File Eat AutoSave OFF DCh 6 Homev Draw Page Layout Formulas Review View Dev Home Insert Data Calibri 14 A % A Number Paste B I . U v A1 X V fx Chapter 6 Homework A B C D E F 20 (b) Prepare February Income Statements 21 (USE APPROPRIATE FORMATS AND LABEL EVERY NUMBER!) 22 My Company 23 Variable Costing Income Statement 24 For Month Ended February 28 25 Sales Hint ? 26 Hint ? 27 Hint? 28 Hint ? 29 30 Hint ? 31 32 Hint ? 33 34 35 36 37 Net Income check: 38 39 My Company 40 Absorption Costing Income Statement 41 For Month Ended February 28 42 Sales 43 44 Hint ? 45 46 47 Hint ? 48 49 50 51 52 53 Net Income check; 54 Homework Settings + Select destination and press ENTER or choose PasteExcel File Edit View Insert Format Tools Data Window Help AutoSave OFF Ch 6 Homework Home Insert Draw Page Layout Formulas Data Review View Developer Calibri 14 v A A ab v % " Condit Format Paste B J . U V Number Cell Sty A1 X V fx Chapter 6 Homework A B C D E F G 54 55 (c) Prepare March Income Statements 56 (USE APPROPRIATE FORMATS AND LABEL EVERY NUMBER! ) 57 My Company 58 Variable Costing Income Statement 59 For Month Ended March 31 60 61 62 63 64 65 66 67 68 69 70 71 Net Income + 72 Net Income check: 73 74 My Company 75 Absorption Costing Income Statement 76 For Month Ended March 31 77 78 79 80 81 82 83 84 85 86 87 Net Income 88 Net Income check Homework Settings + Select destination and press ENTER or choose Paste 12,082 NOV 37 2 333 221 .... RAutoSave OFF DCh 6 Homework Home Insert Draw Page Layout Formulas Data Review View Develope Calibri 14 A A ab % Paste B I . U v A Number A1 X V fx Chapter 6 Homework A B C D E F G 88 Net Income check: 89 90 (d) Analysis (see questions in homework problems) 91 92 February net income: 93 94 Show net income reconciliation of variable and absorption costing: 95 Fixed Overhead Hint ? 96 Fixed OH applied Hint? 97 Difference 98 99 Income under Absorption 100 Income under Variable 101 Difference Hint? 102 103 March net income: 104 105 Show net income reconciliation of variable and absorption costing: 106 Fixed Overhead 107 Fixed OH applied 108 Difference 109 Hint ? 110 Income under Absorption 111 Income under Variable 112 Difference 113 114 115 Remember these points: 1. Variable costing does not include fixed overhead IN PRODUCT COSTS but does include it when & Homework Settings + Select destination and press ENTER or choose Paste 12,082 NOV 37 333 22 . ..Excel File Edit View Insert Format Tools Data Window Help AutoSave OFF Ch 6 Homework Home Insert Draw Page Layout Formulas Data Review View Develop Calibri AA ag 14 % " Paste B I. UV Number A1 x v fx Chapter 6 Homework A B C D E F G 104 105 Show net income reconciliation of variable and absorption costing: 106 Fixed Overhead 107 Fixed OH applied 108 Difference 109 Hint ? 110 Income under Absorption 111 Income under Variable 112 Difference 113 114 115 Remember these points: 1. Variable costing does not include fixed overhead IN PRODUCT COSTS but does include it when 116 calculating net income as a fixed period cost. 2. Absorption costing includes fixed overhead in PRODUCTS COSTS but applies it to the number of 117 units produced when calculating product cost per unit. 3. Variable and Absorption costed income statements will show the same net income when units 118 produced = units sold. 4. Income Statements (under both absorption and variable costing) calculate all variable and 119 product costs as the cost per unit x UNITS SOLD. 120 121 .* Questions adapted from "Accounting Principles: A Business Perspective, Financial Accounting" A 122 Textbook Equity Open College Textbook originally by Hermanson, Edwards, and Maher 123 124 125 126 127 128 129 130 131 Homework Settings + Select destination and press ENTER or choose Paste