Pabbatti Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$112
Units in beginning inventory	520
Units produced	3,000
Units sold	3,100
Units in ending inventory	420
Variable costs per unit:
Direct materials	$35
Direct labour	$20
Variable manufacturing overhead	$7
Variable selling and administrative	$5
Fixed costs:
Fixed manufacturing overhead	$109,200
Fixed selling and administrative	$6,000

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) Prepare an income statement for the month using the contribution format and the variable costing method. c) Without preparing an income statement, determine the absorption costing operating income for the month. (Hint: Use the reconciliation method.)

Short Answer