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Problem 8.30A a-b Alta Products Ltd. has just created a new division to manufacture and sell DVD players. The facility is highly automated and thus
Problem 8.30A a-b Alta Products Ltd. has just created a new division to manufacture and sell DVD players. The facility is highly automated and thus has high monthly fixed costs, as shown in the following schedule of budgeted monthly costs. This schedule was prepared based on an expected monthly production volume of 2,000 units. Manufacturing costs Variable costs per unit Direct materials $28 Direct labour 40 Variable overhead 10 69,600 Total fixed overhead Selling and administrative costs Variable 5 % of sales $45,600 Fixed During August 2020, the following activity was recorded: Units produced 2,000 Units sold 1,620 Selling price per unit $174 Assume the company uses normal casting and uses the budgeted volume of 2,400 units to allocate the fixed overhead rate rather than the actual production volume of 2,000 units. The company expenses production volume variance to cost of goods sold in the accounting period in which it occurs. Do the following: 1. Calculate the manufacturing cost per unit. Manufacturing cost per unit 2. Prepare a normal-costing income statement for the month ended August 31, 2020. ALTA PRODUCTS LTD. Income Statement-Normal Costing Reconcile the difference in net income between the absorption-costing and normal-costing methods. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to O decimal places, e.g. 125.) Normal-costing net income Additional fixed MOH deferred in ending inventory Absorption-costing net income
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