Jupiter Inc., which has only one product, has provided the following data concerning its most recent

month of operations:

Selling price............................................... $112

Units in beginning inventory ..................... 500

Units produced........................................... 2,600

Units sold................................................... 3,000

Units in ending inventory .......................... 100

Variable costs per unit:

Direct materials ...................................... $13

Direct labour........................................... $49

Variable manufacturing overhead .......... $6

Variable selling and administrative ........ $10

Fixed costs:

Fixed manufacturing overhead ............... $80,600

Fixed selling and administrative............. $15,000

The company produces the same number of units every month, although the sales in units vary from

month to month. The company's variable costs per unit and total fixed costs have been constant from

month to month.

REQUIRED

a) What is the unit product cost for the month under variable costing?

b) What is the unit product cost for the month under absorption costing?

c) Prepare an income statement for the month using the variable costing method.

d) Prepare an income statement for the month using the absorption costing method.

e) Reconcile the variable costing and absorption costing net operating incomes for the month.

(13 marks)9/11

QUESTION 4 (CONTD)

(B)

Manhattan Inc. has three operating divisions. Their results for 2019 are as follows:

Leo Gemini Taurus

Sales $5,000,000 $7,000,000 $10,000,000

Contribution margin 1,440,000 1,700,000 3,500,000

Operating income 1,000,000 1,750,000 2,520,000

Investment base 9,000,000 10,000,000 14,000,000

The company's desired rate of return is 20%.

REQUIRED

a) Compute each division's ROI.

b) Compute each division's residual income.

c) Rank each division by both ROI and residual income.

d) Which division had the best performance in 2019? Why?

(7 marks)