Mahugh Company, which has only one product, has provided the following data

concerning its most recent month of operations.

Selling price $$122$

Units in beginning inventory $0$

Units produced $8,300$

Units sold $8,200$

Units in ending inventory $100$

Variable costs per unit:

Direct materials $$27$

Direct labour $$46$

Variable manufacturing overhead $$4$

Variable selling and administrative $$7$

Fixed costs:

Fixed manufacturing overhead $$199,200$

Fixed selling and administrative $$106,600$

Required:

$($a$)$ Compute the cost of a single product unit under both the absorption costing and variable costing approaches.

$($b$)$ Prepare an income statement for the month using the variable costing method.

$($c$)$ Prepare an income statement for the month using the absorption costing method.

$($d$)$ Reconcile the absorption costing and variable costing operating income in $($b$)$ and $($c$).$ BONUS $5$ marks

$$

$($a$)$

Variable Costing

Direct Materials

Direct Labour

Variable Manufacturing OH

Unit Product Cost

Absorption Costing

Direct Materials

Direct Labour

Variable Manufacturing OH

Fixed Manufacturing OH

Unit Product Cost

$($b$)$

Variable costing income

Sales

Less variable expenses:

Variable cost of goods sold

Beginning inventory

Add variable manufacturing costs

Goods available for sale

Less ending inventory

Variable costs of goods sold

Variable selling and admin

Contribution margin

Less $$xed expense:

Fixed manufacturing overhead

Fixed selling and administrative

Operating income

$($c$)$

Absorption costing income statement

Sales

Cost of goods sold:

Beginning inventory

Add cost of good manufactured

Goods available for sale

Less ending inventory

Gross Margin

Less Selling and Admin Expenses

Variable selling and admin

Fixed selling and admin

Operating income

$($d$)$

Operating income under variable costing

Add $$xed manufacturing overhead cost deferred in inventory under absorption costing $(100*$ $$24\mathrm{.}00)$

Operating income under absorption costingMahugh Company, which has only one product, has provided the following data concerning its most recent month of operations.

$\backslash$table$[[$Selling price,$$122$