Question

Stroemann Manufacturing Co. has determined the cost of manufacturing a unit of product as follows, based on normal production of 50,000 units per year:
Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...$ 8
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 6
Variable factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 5
Fixed factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 4
Total cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23
Operating statistics for October and November include the following:


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

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


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  • CreatedMay 05, 2014
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