Question
Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month:
Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month 54 12 2 2 $ 20 $ 72,000 166,000 $235,000 The product sells for $51 per unit. Production and sales data for July and August, the first two months of operations, follow July August Units Produced Units sold 14,000 22,000 18,000 18,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: Sales Cost of goods sold Gross margin Belling and administrative expenses Net operating incone Required: 1. Determine the unit product cost under a. Absorption costing. b. Variable costing July Auguax 5714,000 $1,122,000 308,000 404,000 406,000 638,000 194,000 210,000 $212,000 $428,000 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes.
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