Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables, using
Question:
Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables, using select hardwoods. The division’s monthly costs are shown in the schedule below:
Manufacturing Costs | |
Variable Costs per unit | |
Direct Materials | $152 |
Variable manufacturing overhead | $10 |
Fixed manufacturing overhead costs | $340,000 |
Selling and Administrative costs | |
Variable | %15 of sales |
Fixed | $160,000 |
Zurgot regards all of its workers as full-time employees and the company has a long-standing no-layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labour costs in its fixed manufacturing overhead. The tables sell for $400 each.
During the first month of operations, the following activity was recorded.
Units Produced 4,000
Units Sold 3,200
Reconcile the absorption costing and variable costing operating income as per above.
Managerial Accounting
ISBN: 978-0077522940
15th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer