Variable and Absorption Costing Unit Product Costs and Income Statements iL01, LOTI

Maxwell Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations:

Variable costs per unit: Manufacturing: Direct materials$18 Direct labor$7 Variable manufacturing overhead$2 Variable selling and administrative$2 Fixed costs per year: Axed manufacturing overhead$200,000 Fixed selling and administrative menses . $110,000

During the year, the company produced 20,000 units and sold 16,000 units. The selling price of the company's product is $50 per unit.

Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.

EXERCISE 6-? Variable and Absorption Costing Unit Product Costs and Income Statements [L01, L02] Maxwetl Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: thrills costs per unit: Manufacturing: Dhact malarial! .................... NB Dllsct that ....................... $7 Vltalo mmuhcluriru mourned ...... 32 were oaths lid Idninblralive ........ 82 Fined mm per your: Find Mill-minus Mad .......... $20M!!! Fwd aellngand aunhlatraliva marines . $11M!\" During the year, the company produced 20,000 units and sold 16,000 units. The selling price of the company's product is $50 per unit. Required: 1- Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. 3. Prepare an income statement for the year