Marion Corporation 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 2011 under each of the following:
1. Absorption costing (include under- or overapplied overhead).
2. Variablecosting.

Transcribed Image Text:

Units produced Units sold.... Selling and administrative March 12,000 8,000 April 8,000 12,000 expenses (all fixed) $12,000 $12,000