Question
RRL Company produces a Pambabaeng wallet and a Panlalaking wallet. Selected data for the past year follow: Production (units) Sales units Selling Price Direct
RRL Company produces a Pambabaeng wallet and a Panlalaking wallet. Selected data for the past year follow: Production (units) Sales units Selling Price Direct Labor Hours Manufacturing Costs: Direct Materials Direct Labor PAMBABAENG WALLET PANLALAKING WALLET 100,000 200,000 90,000 210,000 $5.50 $4.50 50,000 80,000 75,000 100,000 250,000 400,000 Variable overhead Fixed overhead: 40,000 48,000 Direct 50,000 40,000 Common 20,000 20,000 Nonmanufacturing Cost Variable Selling 30,000 60,000 Direct Fixed Selling 35,000 40,000 Common Fixed selling 25,000 25,000 NOTE: Common overhead totals $40,000 and is divided equally between the two products Common fixed selling cost totals $50,000 and is divided equally between the two products Budgeted fixed overhead for the year, $130,000, equaled the actual fixed overhead. Fixed overhead is assigned to products using a plantwide rate based on expected direct labor hours, which were 130,000. The company had 10,000 man's wallets in inventory at the beginning of the year. These wallets had the same unit cost as the man's wallets produced during the year. Required: 1. Compute the unit cost for the Pambabaeng and Panlalaking wallets using the variable-costing method. Compute the unit cost using absorption costing. 2. Prepare an income statement using absorption costing. 3. Prepare an income statement using variable costing 4. Reconcile the difference between the two income statements.
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