A D E Problem 2: Absorption costing and Variable Costing 3 Electra Inc. operated at 100% of capacity during its first month and provided following information: 4 Number of units produced: 5 Production costs for 10,000 units: 6 Direct materials 7 Direct labor 8 Variable factory overhead 9 Fixed factory overhead 10 Operating expenses: 11 Variable operating expenses 12 Fixed operating expenses 13 10,000 units $150,000 $50,000 $20,000 $10,000 $230,000 $30,000 $5,000 $35,000 14 Electra sold 8,000 units during the first month at a price of $35 per unit. 15 16 Required: 17 Using the formats below, calculate 18 A. Income from operations and Ending inventory under the Absorption costing. 19 B. Income from operations and Ending inventory under the Variable costing. 20 21 Solution: 22 A. Absorption costing 23 Product costs per unit 24 Sales: 25 COGS 26 Gross profit 27 Operating expenses: 28 Income from operations: 29 30 Ending Inventory: 31 32 A. Variable costing 33 Product costs per unit 34 Sales: 35 Total variable costs: 36 Contribution margin: 37 Total fixed costs: 38 Income from operations: 39 40 Ending Inventory 41 42