i Problem 2: Absorption costing and Variable Costing 2 3 Mask Inc. operated at 100% of capacity during its first month and provided following information: 4 Number of units produced: 15,000 units 5. Production costs (15,000 units); $ 6 Direct materials $75,000 7 Direct labor $105,000 8 Variable factory overhead $45,000 9 Fixed factory overhead $30,000 $255,000 10 Operating expenses: 11 Variable operating expenses $42,300 12 Fixed operating expenses $18,000 $60,000 13 14 Mask sold 13,000 units during the first month at a price of $35 per unit 15 16 Pequired: *17 Using the formats below, calculate: * 18 A. Income from operations and Ending inventory under the Absorption costing. 19 B. Incore from operations and Ending inventory under the Variable costing. 20 21. Solution: 22 A. Absorption costing 23 Product costs per unit 24 Sales 25 COGS 26 Gross profit 27 Operating expenses 28 Income from operations 29 30 Ending Inventory 31 32 B. Variable costing 33 Product costs per unit 34 Sales 35 Total variable costs 36 Contribution margin 37 Total fixed costs 38 Income from operations 39 40 Ending Inventory 41