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Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables, using select hardwoods. The division's monthly costs are shown
Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables, using select hardwoods. The division's monthly costs are shown in the schedule below: Manufacturing costs: Variable costs per unit: Direct materials Variable manufacturing overhead Fixed manufacturing overhead costs (total) Selling and administrative costs: Variable Fixed (total) $ 201 $ 20 $563,880 5% of sales $257,520 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 $508 each. During the first month of operations, the following activity was recorded: Units produced Units sold 4,440 3,310 Required: 1. Compute the unit product cost under each of the following costing method. X Answer is complete but not entirely correct. Unit Product Cost a. 299 x Absorption costing Variable costing b. 221 2. Prepare an income statement for the month using absorption costing. (Do not leave any empty spaces; input a O wherever it is required.) Cost of goods sold: 0 0 0 $ 0 3. Prepare a contribution format income statement for the month using variable costing. (Do not leave any empty spaces; input a O wherever it is required.) Variable expenses: Variable cost of goods sold: 0 0 0 0 Fixed expenses: 0 $ 0 5. Reconcile the absorption costing and variable costing operating income figures in (2) and (3) above. Variable costing operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Absorption costing operating income (loss) $ 0
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