Denton Company manufactures and sells a single product. Costdata for the product are given: Variable costs per
Question:
Denton Company manufactures and sells a single product. Costdata for the product are given: Variable costs per unit: Directmaterials $ 5 Direct labor 11 Variable manufacturing overhead 4Variable selling and administrative 3 Total variable cost per unit$ 23 Fixed costs per month: Fixed manufacturing overhead $ 126,000Fixed selling and administrative 163,000 Total fixed cost per month$ 289,000 The product sells for $45 per unit. Production and salesdata for July and August, the first two months of operations,follow: Units Produced Units Sold July 21,000 17,000 August 21,00025,000 The company?s Accounting Department has prepared thefollowing absorption costing income statements for July and August:July August Sales $ 765,000 $ 1,125,000 Cost of goods sold 442,000650,000 Gross margin 323,000 475,000 Selling and administrativeexpenses 214,000 238,000 Net operating income $ 109,000 $ 237,000Required: 1. Determine the unit product cost under: a. Absorptioncosting. b. Variable costing. 2. Prepare variable costing incomestatements for July and August. 3. Reconcile the variable costingand absorption costing net operating incomes.
Determine the unit product cost under: (a) Absorption costing,(b) Variable costing.
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Managerial Accounting
ISBN: 978-0077522940
15th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer