Question 2 Fresh Air Products manufactures and sells a variety of camping products. Recently the company opened a new plant to manufacture a deluxe portable cooking unit. Cost and sales data for the first month of operations are shown below: 0 units Beginning inventory Units produced Units sold Manufacturing costs Fixed overhead 10,800 9,300 Variable overhead $108,000 $6 per unit $10 per unit $26 per unit Direct labour Direct material Selling and administrative costs Fixed $207,400 $4 per unit sold Variable The portable cooking unit sells for $110. Management is interested in the opening month's results and has asked for an income statement. (a) Your answer is correct. Assuming the company uses variable costing: 1. Calculate the manufacturing cost per unit. Manufacturing cost 42 per unit 2. Prepare a variable-costing income statement for the first month of operation. Fresh Air Products Income Statement-Variable Costing For the first month of operations Sales 1023000 Less : Variable costs Variable cost of goods sold 390600 Variable selling and administrative expenses - 37200 Total variable costs 427800 Contribution margin 595200 Less T Fixed costs Fixed manufacturing overhead 108000 Fixed selling and administrative expenses 207400 Total fixed costs 315400 279800 Operating income before tax (b) Reconcile the difference in net income between the absorption-costing and variable-costing methods. Variable costing operating income $ Fixed manufacturing overhead costs deferred in ending inventory Absorption costing operating income $ LINK TO TEXT LINK TO TEXT