Spaulding Manufacturing Co. has determined the cost of manufacturing a unit of product as follows, based on normal production of 100,000 units per year:

Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5

Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Variable factory overhead . . . . . . . . . . . . . . . . . . . . ... 3

Fixed factory overhead . . . . . . . . . . . . . . . . . . . . . . . .. 3

Total cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15

Operating statistics for March and April include the following:

The selling price is $20 per unit. There were no inventories on March 1, and there is no work in process on April 30.

Required:
Prepare comparative income statements for each month under each of the following:
1. Absorption costing (include under-or over applied fixed overhead).
2. Variablecosting.

Transcribed Image Text:

March April Units produced 12,000 8,000 8,000 2,000 Selling and administrative $12,000 $12,000