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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 $ 17
Fixed manufacturing overhead costs (total) $ 561,105
Selling and administrative costs:
Variable 15 % of sales
Fixed (total) $ 272,970

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 $490 each.

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

Units produced 5,055
Units sold 4,130

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. Not available in Connect.

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

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