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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 | |
(Click to select)Direct materialsSalesSelling and administrative expensesManufacturing overheadFixed expenses | $ |
(Click to select)Manufacturing overheadDirect materialsFixed expensesSelling and administrative expensesCost of goods sold | |
(Click to select)Gross lossGross margin | |
(Click to select)Selling and administrative expensesSalesManufacturing overheadDirect materialsCost of goods sold | |
(Click to select)Net operating incomeNet operating loss | $ |
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 | ||
(Click to select)Manufacturing overheadFixed expensesDirect materialsVariable cost of good soldSales | $ | |
Variable expenses: | ||
(Click to select)Fixed manufacturing overheadFixed selling and administrative expensesVariable cost of goods soldVariable selling and administrative expensesSales | $ | |
(Click to select)Variable selling and administrative expensesSalesFixed manufacturing overheadFixed selling and administrative expensesVariable cost of goods sold | ||
Contribution margin | ||
Fixed expenses: | ||
(Click to select)Variable cost of goods soldSalesFixed selling and administrative expensesFixed manufacturing overheadVariable selling and administrative expenses | ||
(Click to select)Fixed manufacturing overheadSalesVariable selling and administrative expensesFixed selling and administrative expensesVariable cost of goods sold | ||
(Click to select)Net operating incomeNet operating loss | $ | |
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 | $ |
(Click to select)Add fixed manufacturing overhead deferred in inventory under absorption costingLess fixed manufacturing overhead deferred in inventory under absorption costing | |
Net operating income under absorption costing | $ |
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