Zeitgeist Company manufactures siicon sleeves for MP3 players In August of last year, Zeitgeist began producing the colorful sleeves. During the month of August, 16.000 were produced, and 14,750 were sold at $6 95 each The following costs were incurred Drect materals $26.880 Direct labor 6,720 Variable overhead 5,920 Foxed overhead 28,160 A selling commission of 8 % of sales price was paid. Administrative expenses, all fxed, amounted to $37,890 Required: 1. Calculate the unit cost and fhe cost of ending inventory under absorption costing (Round unit cost to the nearest cent and cost of ending inventory to the nearest dollar) 2 Calculate the unit cost and the cost of ending inventory under variable costing (Round unit cost to the nearest cent and cost of endng inventory to the nearest dollar) 3 What is the contribution margin per unt? (Round to the nearest cent) CONCEPTUAL CONNECTION: Zeitgeist believes that multicolored sleeves will really take off after one year of sales Management thinks sales 4, this August will be twice as high as sales last August Prepare an income stalement for August of this year using the assumed higher level of sales Which costing method should be used-absorption costing or variable costing? 1. Calculate the unit cost and the cost of ending inventory under absorption costing (Round unit cost to the nearest cent and cosf of ending inventory to the nearest dollar) Under the absorption costing method, the unit cost is $ The cost of ending inventory is S Points 0/2 2 Calculate the unit cost and the cost of ending inventory under variable costing (Round unt cost to the nearest cent and cost of ending inventory to the nearest dollar) Under the variable costing method, the unit cost is S The cost of ending inventory is $ 0/2 Points 3 What is the contribution margin per unit? (Round to the nearest cent) The contribution margin per unit is S 0/1 Points Zeitgeist believes that multicolored sleeves will really take off after one year of sales. Management thinks sales this August will be twice as high as sales last August (Be sure to complete 4(b) below the income statement.) pry to th 4(a) Prepare an income statement for August of this year using the assumed higher level of sales. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your income statement bints to the Score: 47/83 Zeitgeist Company Income Statement For August of This Year bints 1 Sales Less variable expenses 2 Variable cost of goods sold 3 Commissions 4 Sihts Contribution margin Less fixed expenses: 6 Fixed overhead 7 Fixed overhead 7 Fixed administrative 8 9 Operating income Po 4(b) Which costing method should be used-absorption costing or variable costing? variable Zeitgeist should choose the costing method
