Question

Florence Corp. has determined the following selling price and manufacturing cost per unit based on normal production of 72,000 units per year:
Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22
Variable cost per unit: Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Variable factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 2
Variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10
Fixed cost per unit:
Fixed factory overhead per year . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 360,000
Fixed selling and administrative expense per year . . . . . . . . ..... 48,000
Normal unit production per year . . . . . . . . . . . . . . . . . . . . . . . . . . 72,000


October has no beginning inventories.

Required:
Prepare comparative income statements, including a comparative schedule of cost of goods sold, for each of these three months in 2013 under each of the following:
1. Absorption costing (include under- or overapplied overhead).
2. Variablecosting.


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  • CreatedMay 05, 2014
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