Question

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.


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  • CreatedMay 05, 2014
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