Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 42,000 units and sold 34,000 units at a price of $110 per unit.

Manufacturing costs
Direct materials per unit	$	42
Direct labor per unit	$	16
Variable overhead per unit	$	5
Fixed overhead for the year	$	378,000
Selling and administrative costs
Variable selling and administrative cost per unit	$	11
Fixed selling and administrative cost per year	$	110,000

1a. Assume the company uses absorption costing. Determine its product cost per unit.

Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 42,000 units and sold 34,000 units at a price of $110 per unit.

Manufacturing costs
Direct materials per unit	$	42
Direct labor per unit	$	16
Variable overhead per unit	$	5
Fixed overhead for the year	$	378,000
Selling and administrative costs
Variable selling and administrative cost per unit	$	11
Fixed selling and administrative cost per year	$	110,000

1b. Assume the company uses absorption costing. Prepare its income statement for the year under absorption costing.

Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 42,000 units and sold 34,000 units at a price of $110 per unit.

Manufacturing costs
Direct materials per unit	$	42
Direct labor per unit	$	16
Variable overhead per unit	$	5
Fixed overhead for the year	$	378,000
Selling and administrative costs
Variable selling and administrative cost per unit	$	11
Fixed selling and administrative cost per year	$	110,000

2a. Assume the company uses variable costing. Determine its product cost per unit.

Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 42,000 units and sold 34,000 units at a price of $110 per unit.

Manufacturing costs
Direct materials per unit	$	42
Direct labor per unit	$	16
Variable overhead per unit	$	5
Fixed overhead for the year	$	378,000
Selling and administrative costs
Variable selling and administrative cost per unit	$	11
Fixed selling and administrative cost per year	$	110,000

2b. Assume the company uses variable costing. Prepare its income statement for the year under variable costing.

Answer rating: 100% (QA)

Solution Cool Sky 1a Absorption costing Product cost per unit Direct materials Direct labor Variable ... View the full answer