Question
Frances Manufacturing manufactures a product that it will sell for $200 per unit. The company is looking to project its operating income for its first
Frances Manufacturing manufactures a product that it will sell for $200 per unit. The company is looking to project its operating income for its first two years of operations. Cost information for the single product is as follows: Selling price per unit $200 Direct materials per unit produced $75 Direct labor cost per unit produced $50 Variable manufacturing overhead (MOH) per unit produced $10 Variable selling & administrative expenses per unit sold $8 Total fixed manufacturing (MOH) $300,000 Total fixed selling & administrative expenses $20,000 During its first year of operations, the company plans to manufacture 10,000 units and anticipates selling 8,000 of those units. During the second year of its operations, the company plans to manufacture 10,000 units and anticipates selling 11,000 units. It will have units in beginning inventory for the second year, from its first year of operations) Prepare an absorption costing income statement, and variable costing income statement for its first and second year of operations.
4. Kaufman Corporation produces a single product. Last year, the company had net operating income of $65,000 using absorption costing. The company produced 11,000 units and sold 8,000 units. If the fixed manufacturing overhead was $3 per unit, what would have been last years operating income using variable costing?
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