Pabbatti Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $ 108 770 2,400 2,850 320 $ $ $ $ 11 23 24 $57,600 $ 5,700 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. (Hint: Use the reconciliation method.) Required: a. What is the unit product cost for the month under variable costing? Answer is complete and correct. Cost per unit Variable $ 49 costing b. Prepare a contribution format income statement for the month using variable costing. Answer is complete but not entirely correct. PABBATTI CORPORATION Variable Costing Income Statement $ 307,800 Sales Variable expenses: 65,550X Indirect materials 68,400X Indirect labor 5,700X Variable cost of goods sold 31,350 Variable selling and administrative expense 171,000 Contribution margin 136,800 Fixed expenses: 57,600 Fixed manufacturing overhead 5,700 Fixed selling and administrative expense 10,800 x Fixed manufacturing overhead 74,100 62,700 Net operating loss c. Without preparing an income statement, determine the absorption costing net operating income for the month.(Hint: Use the reconciliation method.) Answer is complete and correct. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes 73,500 Variable costing net operating income Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing 10,800 62,700 Absorption costing net operating income Pabbatti Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $ 108 770 2,400 2,850 320 $ $ $ $ 11 23 24 $57,600 $ 5,700 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. (Hint: Use the reconciliation method.) Required: a. What is the unit product cost for the month under variable costing? Answer is complete and correct. Cost per unit Variable $ 49 costing b. Prepare a contribution format income statement for the month using variable costing. Answer is complete but not entirely correct. PABBATTI CORPORATION Variable Costing Income Statement $ 307,800 Sales Variable expenses: 65,550X Indirect materials 68,400X Indirect labor 5,700X Variable cost of goods sold 31,350 Variable selling and administrative expense 171,000 Contribution margin 136,800 Fixed expenses: 57,600 Fixed manufacturing overhead 5,700 Fixed selling and administrative expense 10,800 x Fixed manufacturing overhead 74,100 62,700 Net operating loss c. Without preparing an income statement, determine the absorption costing net operating income for the month.(Hint: Use the reconciliation method.) Answer is complete and correct. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes 73,500 Variable costing net operating income Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing 10,800 62,700 Absorption costing net operating income
