Chapter $6$ Question $(20$ points$)$

Unit Product Cost Computation Direct Materials

Direct Labor

Variable Manufacturing Overhead

Fixed Manufacturing Overhead

a$.$ Room for computation

Unit Product Cost

Set$-$up for $2)$

Units Sold

Selling Price

Variable Selling & Administrative Bep.

$2.$ Variable Costing income Statements Sales Variable Expenses:

Variable Cost of Goods Soled

Variable Selling & Adminictrative ben.

Total Variable Expenses

Contribution Margin

Fuxed Expenses:

Fored Manstacturing Overheas

Foed Selling & Administrative Expenses

Total Fixed Expenses

Net Operating income $($Loss$)$

$3.$ Reconole Varuble and ALsorption

Units in Inventory Analysis:

Units in Beginning Imvention

tunits produced

Units Sole

munits in Ending inventon

Fued Manul. OH Deferred$/$Released:

Fixed Manul, Overthead in Endins

inventory

Faxed Manul. Overhead in Beginning Inventory

wived Manut Overhead deferred in $($rretensed from$)$ inventory

a$.$ Absorption Costing b$.$ Variable Costing

Reconcliation:

Variable C$.$ Net Operating income $($Loss$)$ S

$4$ Fixed Manut. Overthead Cost. Delerred.

in inventory under Absorption Costing S

Fixed Manut. Overhead Cost Released

from inventory under Absorption $C.$

Absorption Costing Net Operating tincom s

Given: Fringe Company manufactures and sells one type of fringed jacket cost data for the fringed jacket are: Variable costs per jacket:

Direct Materials

Direct Labor

Variable Manufacturing Overhead

Variable Selling and Administrative

Total Variable Cost per jacket

$

$

$5$

$5$

s

$13$

$1320$

$10$

$10$

$649$

Fixed costs per month:

Fixed Manufacturing Overhead $ $ $630,000$

Fired Selting and A$$ministrative $ $490,000$

Total Fixed Cost per month $ $1,120,000$

Each fringed jacket sells for $$150.$ Production and sales data for January and February, the first two months of operations, are:

Units Produced Units Sold

January

$18,000,15,000$

$18,000,21,000$

February

The company's Accounting Department has prepared the following absorption costing income statements for lanuary and February Sales

Cost of Goods Sold

Gross Margin

Selling and Administrative Expenses

$\backslash$table$[[$$$,2,250,000,$$$,3,150,000$