Perez Company incurred manufacturing overhead cost for the year as follows. Direct materials $ 38.80 /unit Direct
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Question:
Direct materials | $ | 38.80 | /unit |
Direct labor | $ | 28.00 | /unit |
Manufacturing overhead | |||
Variable | $ | 11.10 | /unit |
Fixed ($19.50/unit for 1,800 units) | $ | 35,100 | |
Variable selling and administrative expenses | $ | 8,060 | |
Fixed selling and administrative expenses | $ | 15,900 | |
The company produced 1,800 units and sold 1,300 of them at $181.20 per unit. Assume that the production manager is paid a 3 percent bonus based on the company’s net income.
Required
Prepare an income statement using absorption costing.
Prepare an income statement using variable costing.
Determine the manager’s bonus using each approach. Which approach would you recommend for internal reporting?
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor-Yi Tsay, Philip Old
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