Question
UHF Antennas, Inc., produces and sells a unique television antenna. The company has just opened a new plant to manufacture the antenna, and the following
UHF Antennas, Inc., produces and sells a unique television antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been reported for the first month of the new plant's operation:
Beginning inventory | 0 | |||
Units produced | 35,000 | |||
Units sold | 30,000 | |||
Sales price per unit | $ | 50 | ||
Selling and administrative expenses: | ||||
Variable per unit | $ | 2 | ||
Fixed (total) | $ | 360,000 | ||
Manufacturing costs: | ||||
Direct materials cost per unit | $ | 9 | ||
Direct labor cost per unit | $ | 8 | ||
Variable manufacturing overhead cost per unit | $ | 3 | ||
Fixed manufacturing overhead (total) | $ | 350,000 | ||
|
Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month. Assume that direct labor is a variable cost. |
Required: | |
a. | Assuming that the company uses absorption costing, compute the unit product cost and prepare an income statement. (Input all amounts as positive values.) |
Unit product cost | $ |
Absorption costing income statement | |
$ | |
| |
| |
$ | |
| |
|
b. | Assuming that the company uses variable costing, compute the unit product cost and prepare an income statement. (Input all amounts as positive values.) |
Unit product cost | $ |
Variable costing income statement | ||
$ | ||
Variable expenses: | ||
$ | ||
| | |
Contribution margin | ||
Fixed expenses: | ||
| | |
$ | ||
| ||
|
c. | Reconcile the absorption costing and variable costing net operating income figures in (a) and (b) above. (Input all amounts as positive values.) |
Net operating income under variable costing | $ |
| |
Net operating income under absorption costing | $ |
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