Question

Linus Company manufactures and distributes industrial air compressors. The following costs are available for the year ended December 31, 2014. The company has no beginning inventory. In 2014, 1,500 units were produced, but only 1,300 units were sold. The unit selling price was $4,500. Costs and expenses were as follows.
Variable costs per unit
Direct materials ................ $ 1,000
Direct labor ...................... 1,500
Variable manufacturing overhead .............. 500
Variable selling and administrative expenses ...... 60
Annual fixed costs and expenses
Manufacturing overhead ........................... $1,400,000
Selling and administrative expenses ...................... 100,000

Instructions
(a) Compute the manufacturing cost of one unit of product using variable costing.
(b) Prepare a 2014 income statement for Linus Company using variable costing.



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  • CreatedJanuary 30, 2014
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