Manus Factotum is a slow fashion industry that produces and sells a single product, a naturally dyed, handwoven and organic cotton Midi Dress. Selected cost and operating data relating to the product for two years are given below: Selling price per unit £300 Manufacturing costs: Variable per unit produced: Direct materials 90 Direct labor 50 Variable overhead 25 Fixed per year 15,000 Selling and administrative costs: Variable per unit sold 15 Fixed per year 13000 Year 1 Year 2 Units in beginning inventory 0 50 Units produced during the year 300 200 Units sold during the year 250 250 Units in ending inventory 50 0 Required: a) Compute the unit product cost under:

i. Variable costing 

ii. Absorption costing  

b) Prepare the income statements for Year 1 and Year 2 under: i. Variable costing ii. Absorption costing 

c) Reconcile the variable costing and absorption costing profit figures. 

d) Explain any differences between the income statements under  a  and  b for Year 1 and Year 2.r

Answer rating: 100% (QA)

Manus Factotum Costing and Income Statements a Unit Product Cost i Variable Costing Variable cost per unit Direct materials Direct labor Variable over... View the full answer