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Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables, using select hardwoods. The divisions monthly costs are shown

Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables, using select hardwoods. The divisions monthly costs are shown in the schedule below:

Manufacturing costs:
Variable costs per unit:
Direct materials $ 192
Variable manufacturing overhead $ 13
Fixed manufacturing overhead costs (total) $ 438,840
Selling and administrative costs:
Variable 10 % of sales
Fixed (total) $ 333,900

Zurgot regards all of its workers as full-time employees, and the company has a long-standing no-layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labour costs in its fixed manufacturing overhead. The tables sell for $489 each.

During the first month of operations, the following activity was recorded:

Units produced 4,770
Units sold 3,550

Required:

1. Compute the unit product cost under each of the following costing method.

2. Prepare an income statement for the month using absorption costing. (Do not leave any empty spaces; input a 0 wherever it is required.)

3. Prepare a contribution format income statement for the month using variable costing. (Do not leave any empty spaces; input a 0 wherever it is required.)

4. This part of the question is not part of your Connect assignment.

5. Reconcile the absorption costing and variable costing operating income figures in (2) and (3) above.

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