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Check Leander Office Products Inc produces and sells small storage and organizational products for office use. During the first month of operations, the products sold well Andrea Leander, the owner of the company was surprised to see a loss for the month on her income statement. This statement was prepared by a local bookkeeping service recommended to her by her bank manager. The statement follows LEANDER OTTICE PRODUCTS INC Income Statement Sales (51,200 units) 5291,840 Var fable expenses Variable cost of goods sold" 3120.000 Variable selling and administrative experies 51,212 179,712 Contribution margin 112,128 Fixed expenses Fixed manufacturing overhead 114, Fixed selling and administrative expenses 18,944 13,249 (11,621) Operating loss *Consists of direct materials, direct labour, and variable manufacturing overhead Leander is discouraged over the loss shown for the month particularly since she had planned to use the statement to encourage Investors to purchase stock in the new company. A friend who is an accountant insists that the company should be using absorption costing rather than variable costing He argues that it absorption costing had been used the company would probably have reported a profit for the month Selected cost data relating to the product and to the first month of operations follow Selected cost data relating to the product and to the first month of operations follow, 61,650 51,200 Units produced Units sold Variable costs per unit Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative expenses 51.36 10.90 0.24 1:01 Required: 1. Complete the following: a. Compute the unit product cost under absorption costing (Round your answer to 2 decimal place Unit product cost b. Redo the company's income statement for the month using absorption costing. (Do not leave any empty spaces: input a wherever it is required.) c. Reconcile the variable and absorption costing operating income (loss) figures (Loss amounts should be entered with a minus sign.) Check my work Variable costing operating income foss) Add Freed manufacturing overhead cost deferred in inventory under absorption costing Absorption costing operating income (los) 2. Not available in Connect 3. During the second month of operations, the company again produced 61,650 units but sold 72100 units. Assume no change in total fixed costs) o. Prepare a contribution format income statement for the month using variable costing Variable expenses b. Prepare an income statement for the month using absorption costing Do not leave any empty spaces, Input wherever it is required) Cost of goods sold c Reconcile the variable costing and absorption costing operating income figures Variable costing operating income foss)
