Question
Santana Corporation has provided the following data for its two most recent years of operation. The company makes a product that it sells for $90
Santana Corporation has provided the following data for its two most recent years of operation. The company makes a product that it sells for $90 per unit. It began Year 1 with no units in beginning inventory. | ||
Selling Price per unit | $110 | |
Manufacturing costs: | ||
Variable manufacturing cost per unit produced: | ||
Direct materials | $13 | |
Direct labor | $7 | |
Variable manufacturing overhead | $4 | |
Fixed manufacturing overhead per year | $224,000 | |
Selling and administrative expenses: | ||
Variable selling and administrative expense per unit sold | $5 | |
Fixed selling and administrative expense per year | $94,000 | |
Year 1 | Year 2 | |
Units produced during the year | 8,000 | 7,000 |
Units sold during the year | 7,000 | 6,000 |
Units in ending inventory | 1,000 | 2,000 |
Required: | ||
a. Assume the company uses absorption costing. Compute the unit product cost in each year. Show your work | ||
b. Assume the company uses variable costing. Compute the unit product cost in each year. | ||
c. Assume the company uses absorption costing. Prepare an income statement for each year. Show your work | ||
d. Assume the company uses variable costing. Prepare an income statement for each year. |
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