Question
Lee Company, which has only one product, has provided the following data for February 2020: Selling price $200 Planned production 8,000 units Units in beginning
Lee Company, which has only one product, has provided the following
data for February 2020:
Selling price | $200 |
Planned production | 8,000 units |
Units in beginning inventory | 100 |
Cost of beginning inventory | Full cost $85 including variable cost $68 and fixed cost of $17 per unit. |
Units produced | 7,000 |
Units sold | 6,500 |
Direct materials per unit | $42 |
Direct labor per unit | $28 |
Variable overhead per unit | $2 |
Variable selling per unit | $5 |
Fixed manufacturing cost | $160,000 |
Fixed selling cost | $325,000 |
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 contribution format and 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 incomes for the month.
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