Question
Fresh Air Products manufactures and sells a variety of camping products. Recently the company opened a new plant to manufacture a deluxe portable cooking unit.
Fresh Air Products manufactures and sells a variety of camping products. Recently the company opened a new plant to manufacture a deluxe portable cooking unit. Cost and sales data for the first month of operations are shown below:
Manufacturing Costs
Fixed overhead $ 150,000
Variable overhead $ 7 per unit
Direct labour $ 15 per unit
Direct material $ 33 per unit
Beginning inventory 0 units
Units produced 15,000
Units sold 11,000
Selling and administrative costs
Fixed $ 121,000
Variable $ 3 per unit sold
The portable cooking unit sells for $90. Management is interested in the opening months results and has asked for an income statement.
Instructions
Calculate the production cost per unit, and prepare income statements for the month of June 2020 under absorption costing and Variable costing
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