Question

Information for a start-up firm that is introducing a new product follows.
Production costs:
Variable ......... $40 per unit
Fixed .......... $10,000 per month
Selling and administration:
Variable ......... $9 per unit
Fixed ........... $25,000 per month
Selling price ....... $89 per unit
Production volume ..... 1,000 units
Sales volume ........ 850 units

REQUIRED
A. Using the variable costing method: (1) calculate the cost of ending inventory and (2) prepare an income statement.
B. Using the absorption costing method (1) calculate the cost of ending inventory and (2) prepare an income statement.
C. Reconcile income under the two methods.



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  • CreatedJanuary 26, 2015
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