Great Outdoze Company manufactures sleeping bags, which sell for $66.10 each. The variable costs of production are as follows:

Direct material	$	19.50
Direct labor		10.00
Variable manufacturing overhead		8.00

Budgeted fixed overhead in 20x1 was $225,000 and budgeted production was 30,000 sleeping bags. The year’s actual production was 30,000 units, of which 26,500 were sold. Variable selling and administrative costs were $1.10 per unit sold; fixed selling and administrative costs were $23,000.

Required:
1. Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing.
2-a. Prepare an operating income statement for the year using absorption costing.
2-b. Prepare an operating income statement for the year using variable costing.
3. Reconcile reported operating income under the two methods using the shortcut method.

  
 
 

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Complete this question by entering your answers in the tabs below. Req 1 Req 2A Absorption costing Variable costing Req 2B Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Req 3 Product Cost Per Unit Req 1 Req 2A > Complete this question by entering your answers in the tabs below. Req 1 Req 2A Absorption costing Variable costing Req 2B Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Req 3 Product Cost Per Unit Req 1 Req 2A >

Answer rating: 100% (QA)

Ans 1 Product cost as per absorbtion costing Under Absorpt... View the full answer