Florence Corp. has determined the following selling price and manufacturing cost per unit based on normal production of 72,000 units per year:

Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22

Variable cost per unit: Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4

Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Variable factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 2

Variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10

Fixed cost per unit:

Fixed factory overhead per year . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 360,000

Fixed selling and administrative expense per year . . . . . . . . ..... 48,000

Normal unit production per year . . . . . . . . . . . . . . . . . . . . . . . . . . 72,000

October has no beginning inventories.

Required:
Prepare comparative income statements, including a comparative schedule of cost of goods sold, for each of these three months in 2013 under each of the following:
1. Absorption costing (include under- or overapplied overhead).
2. Variablecosting.

Transcribed Image Text:

Month Units Produced 6,000 1,000 8,000 Units Sold 3,000 4,000 6,000