Question
linden company manufactures and sells a single product. Cost data for the product follow:Variable costs - direct materials $6 direct labor 12, variable factory overhead
linden company manufactures and sells a single product. Cost data for the product follow:Variable costs - direct materials $6 direct labor 12, variable factory overhead 4, variable selling & admin 3, total variable cost per unit $25 fixed costs per month fixed manufacturing OH 240000, fixed selling & admin 180000 total fixed cost per month 420000. The product sells for $40 per unit. Production and sales data for May & June the first two months are May units produced 30000 units sold 26000 June units produced 30000 units sold 34000. Income ststement prepared using absorption costing are: Sales may / june 1040000 / 1360000 cost of goods sold 780000 / 1020000, gross margin 260000 / 340000 selling & admin expenses 258000/ 282000 NOI 2000/ 58000 1) prepare contribution format variable costing icoe statement for May & june 2) reconcile the variable costing and absorption costing net operating incomes. 3) the company has determined break even point to be 28000 units per month it was computed as fixed cost per month/unit CM = 420000/15 per unit=28000units the controller says break even point is 28000 units per month yet we only sold 26000 units in May and the income statement showed a $2000 profit - which do we believe - what happened on the May income statement? please show all work so I know how to do this problem
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started