Dairy Processing Company manufactures and sells premium lactose-free milk and ordinary milk by gallon. It adopted...
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Dairy Processing Company manufactures and sells premium lactose-free milk and ordinary milk by gallon. It adopted first in first out inventory costing system. It has just finished its first year operations. The following data relates to this first year: Number of gallons sold Number of gallons produced Unit sales price per gallon Unit cost of milk purchased from local dairy farmers per gallon Wages and salaries paid to machine operators at diary processing plant per gallon Total depreciation on dairy machines Unit advertising expenses per gallon Total depreciation on Marketing department November 1,200 gallons 1,400 gallons $55.00 per gallon $13 per gallon $7 per gallon $2,100 $5 per gallon $2,400 December 1,300 gallons 1.250 gallons $53.00 per gallon $11 per gallon $7 per gallon $2,100 $5.2 per gallon $2,500 Required: a. (4 marks) What is the unit product cost (per gallons) under absorption costing and under variable costing for November and December? b. (4 marks) Using absorption costing, prepare Dairy Processing Company's income statement for December. c. (4 marks) is operating income in December higher under absorption costing or variable costing? Explain. Briefly discuss the necessity of variable costing. Dairy Processing Company manufactures and sells premium lactose-free milk and ordinary milk by gallon. It adopted first in first out inventory costing system. It has just finished its first year operations. The following data relates to this first year: Number of gallons sold Number of gallons produced Unit sales price per gallon Unit cost of milk purchased from local dairy farmers per gallon Wages and salaries paid to machine operators at diary processing plant per gallon Total depreciation on dairy machines Unit advertising expenses per gallon Total depreciation on Marketing department November 1,200 gallons 1,400 gallons $55.00 per gallon $13 per gallon $7 per gallon $2,100 $5 per gallon $2,400 December 1,300 gallons 1.250 gallons $53.00 per gallon $11 per gallon $7 per gallon $2,100 $5.2 per gallon $2,500 Required: a. (4 marks) What is the unit product cost (per gallons) under absorption costing and under variable costing for November and December? b. (4 marks) Using absorption costing, prepare Dairy Processing Company's income statement for December. c. (4 marks) is operating income in December higher under absorption costing or variable costing? Explain. Briefly discuss the necessity of variable costing.
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Related Book For
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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