1. Unit Product Cost Computation Direct Materials a. Absorption Costing b. Variable Costing per unit Given: Disco Inferno Company manufactures and sells one type of sequined shirt. Cost data for the sequined shirt are: Variable costs per shirt: Direct Labor Fixed Manufacturing Overhead a. Room for computation Unit Product Cost per unit Direct Materials $ 30 Variable Manufacturing Overhead per unit Direct Labor 40 per unit Variable Manufacturing Overhead $ 20 Variable Selling and Administrative 12 $ per unit Total Variable Cost per shirt $ 102 Set-up for 2) January February Fixed costs per month: Units Sold Selling Price Fixed Manufacturing Overhead $ 1,260,000 per unit Fixed Selling and Administrative $ 980,000 Variable Selling & Administrative Exp. per unit Total Fixed Cost per month $ 2,240,000 2. Variable Costing Income Statements January February Each sequined shirt sells for $300. Production and sales data for January and February, the first two months of operations, are: Sales $ $ Variable Expenses: Variable Cost of Goods Sold $ $ January February 18,000 18,000 Units Produced Units Sold 15,000 21,000 Variable Selling & Administrative Exp. $ $ Total Variable Expenses $ Contribution Margin $ $ Fixed Expenses: Fixed Manufacturing Overhead Fixed Selling & Administrative Expenses. Total Fixed Expenses $ $ Net Operating Income (Loss) $ S 4,500,000 $ 6,300,000 Cost of Goods Sold $ 2,400,000 $ 3,360,000 Gross Margin $ 2,100,000 $ 2,940,000 Selling and Administrative Expenses $ Net Operating Income 1,160,000 $ 1,232,000 $ 940,000 $ 1,708,000 Required: The company's Accounting Department has prepared the following absorption costing income statements for January and February: Sales 3. Reconcile Variable and Absorption 1. Determine the unit product cost under: Units in Inventory Analysis: January February a. Absorption Costing Units in Beginning Inventory +Units Produced -Units Sold =Units in Ending Inventory Fixed Manuf. OH Deferred/Released: Fixed Manuf. Overhead in Ending Inventory $ -Fixed Manuf. Overhead in Beginning Inventory $ $ Fixed Manuf. Overhead deferred in (released from) inventory $ Reconciliation: Variable C. Net Operating Income (Loss) $ + Fixed Manuf. Overhead Cost Deferred in Inventory under Absorption Costing S - Fixed Manuf. Overhead Cost Released from Inventory under Absorption C. Absorption Costing Net Operating Incom $ b. Variable Costing Compute in the template on the left or in a separate file or screenshot of a paper sheet. 2. Prepare variable costing income statements for January and February using the template on the left or in a separate file or screenshot of a paper document. 3. Reconcile the variable costing and absorption costing net operating incomes using the template on the left or in a separate file or screenshot of a paper document. 4. Explain why the variable costing net operating income is different from the absorption costing net operating income. Answer below or in a separate file or screenshot of a paper document. 4. Explain why the variable costing net operating income is different from the absorption costing net operating income. Answer below or in a separate file or screenshot of a paper document.