Question 1 (25 marks) ERGELA Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Mandag Direct Ureditator Varie manufacturing over end Variable selling and administre Foad cost per year Pusdung veel 250.00 Fixed Wing ed adentrati per 132.00 During the year, the company produced 20,000 units and sold 19,000 units. The selling price of the company's product is $75 per unit. Required: 1. Assume that the company uses absorption costing, a. Compute the unit product cost. (5 marks) Prepare an income statement for the year (8 marks) Absorption Costing Income Statement Sales Cost of goods sold Beginning inventory Add Cost of goods manufactured Goods avalatie for sale Less Ending inventory Gross margin Selling and administrative expenses Operating income 2. Assume that the company uses variable costing. 2. Assume that the company uses variable costing. Compute the unit product cost. (2 marks) b. Prepare an income statement for the year. (10 marks) Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold: Beginning inventory Add: Variable manufacturing costs Goods available for sale Less: Ending inventory Variable cost of goods sold Variable selling expense Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Operating income Question 1 (25 marks) ERGELA Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Mandag Decas Dractie Vising and Find ang hot Pred seting and son During the year, the company produced 20,000 units and sold 19,000 units. The selling price of the company's product is $75 per unit. Required: 1. Assume that the company uses absorption costing. a. Compute the unit product cost. (5 marks) Prepare an income statement for the year (8 marks) Absorption Costing Income Statement Sales ( Coll doodsto Beginning inventory Add Cost of goods manufactured Goods available for sale Loss Ending inventory Gross margin Selling and administrative expenses Operating income 2. Assume that the company uses variable costing. 2. Assume that the company uses variable costing. .. Compute the unit product cost. (2 marks) b. Prepare an income statement for the year. (10 marks) Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold: Beginning inventory Add: Variable manufacturing costs Goods available for sale Less: Ending inventory Variable cost of goods sold Variable selling expense Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Operating income Question 1 (25 marks) ERGELA Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Mandag Direct Ureditator Varie manufacturing over end Variable selling and administre Foad cost per year Pusdung veel 250.00 Fixed Wing ed adentrati per 132.00 During the year, the company produced 20,000 units and sold 19,000 units. The selling price of the company's product is $75 per unit. Required: 1. Assume that the company uses absorption costing, a. Compute the unit product cost. (5 marks) Prepare an income statement for the year (8 marks) Absorption Costing Income Statement Sales Cost of goods sold Beginning inventory Add Cost of goods manufactured Goods avalatie for sale Less Ending inventory Gross margin Selling and administrative expenses Operating income 2. Assume that the company uses variable costing. 2. Assume that the company uses variable costing. Compute the unit product cost. (2 marks) b. Prepare an income statement for the year. (10 marks) Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold: Beginning inventory Add: Variable manufacturing costs Goods available for sale Less: Ending inventory Variable cost of goods sold Variable selling expense Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Operating income Question 1 (25 marks) ERGELA Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Mandag Decas Dractie Vising and Find ang hot Pred seting and son During the year, the company produced 20,000 units and sold 19,000 units. The selling price of the company's product is $75 per unit. Required: 1. Assume that the company uses absorption costing. a. Compute the unit product cost. (5 marks) Prepare an income statement for the year (8 marks) Absorption Costing Income Statement Sales ( Coll doodsto Beginning inventory Add Cost of goods manufactured Goods available for sale Loss Ending inventory Gross margin Selling and administrative expenses Operating income 2. Assume that the company uses variable costing. 2. Assume that the company uses variable costing. .. Compute the unit product cost. (2 marks) b. Prepare an income statement for the year. (10 marks) Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold: Beginning inventory Add: Variable manufacturing costs Goods available for sale Less: Ending inventory Variable cost of goods sold Variable selling expense Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Operating income
