Information for Asian Windows is given in E8-17.
In E8-17
Asian Windows manufactures a hand-painted bamboo window shade for standard-size windows. Production and sales data for 2012 are as follows:
Variable manufacturing costs ....................................... $40 per shade
Fixed manufacturing costs ..........................................$100,000
Variable selling and administrative expenses ................... $9 per shade
Fixed selling and administrative expenses ...................... $250,000
Selling price ......................................................... $90 per shade
Units produced ..................................................... 10,000 shades
Units sold ........................................................... 8,500 shades
Instructions
(a) Assume the company uses normal costing and uses the budgeted volume of 8,000 units to allocate the fixed overhead rate rather than the actual production volume of 10,000 units. The company expenses production volume variance to cost of goods sold in the accounting period in which it occurs. Do the following:
1. Calculate the manufacturing cost per unit.
2. Prepare a normal-costing income statement for 2012.
(b) Reconcile the difference in net income between the absorption-costing and normal-costing methods.