Information for Xantra Corp. is provided in P8-32A.
In P8-32A
Xantra Corp. is a manufacturer of specialty in-line skates. The operating results for 2012 are as follows:
Units produced ............................................................. 20,000 pairs
Units sold ................................................................... 18,000 pairs
Selling price ............................................................... $200 per pair
Production information:
Direct materials .............................................................. $1,000,000
Direct labour ..................................................................... 750,000
Variable manufacturing overhead ............................................. 450,000
Fixed manufacturing overhead ................................................ 800,000
Variable marketing costs ....................................................... 180,000
Fixed marketing costs ........................................................... 200,000
Instructions
(a) Assume the company uses normal costing and uses the budgeted volume of 25,000 pairs to allocate the fixed overhead rate rather than the actual production volume of 20,000 pairs. 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.