Question
Oates Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price.............................................. $120 Units in beginning
Oates Company, which has only one product, has provided the following data concerning its most recent month of operations:
| Selling price.............................................. | $120 |
|
|
|
| Units in beginning inventory..................... | 0 |
| Units produced.......................................... | 7,600 |
| Units sold................................................... | 7,400 |
| Units in ending inventory.......................... | 200 |
|
|
|
| Variable costs per unit: |
|
| Direct materials...................................... | $15 |
| Direct labor............................................. | $48 |
| Variable manufacturing overhead.......... | $7 |
| Variable selling and administrative........ | $10 |
|
|
|
| Fixed costs: |
|
| Fixed manufacturing overhead............... | $228,000 |
| Fixed selling and administrative............ | $66,600 |
Required:
- Prepare an income statement for the month using the contribution format and the variable costing method.
- Prepare an income statement for the month using the absorption costing method.
- Prepare a reconciliation showing the change between the variable costing net income and the absorption net income.
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