CLAP Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing
Question:
CLAP Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs.
January | February | |
Beginning inventory | 0 | −−− |
Production | 2,500 | 3,000 |
Sales | 2,250 | 3,025 |
Other information: | ||
Selling price | $20.00 | |
Standard variable manufacturing cost/unit | $8.00 | |
Standard variable market/admin. cost/unit | $4.00 | |
Standard fixed manufacturing overhead cost/month | $40,000 | |
Standard fixed market/admin. cost/month | $20,000 | |
Budgeted denominator level per month (output units) | 4,000 |
There were no beginning or ending inventories of materials or work−in−process.
What would CLAP Company's operating income (loss) be for January and February, respectively, using the absorption costing approach?
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher