Variable vs. Absorption

Maffei Company, which has only one product, has provided the following data concerning its most recent month of operations:

	Selling price..............................................	$138
	Units in beginning inventory.....................	0
	Units produced..........................................	7,200
	Units sold...................................................	7,000
	Units in ending inventory..........................	200
	Variable costs per unit:
	Direct materials......................................	$42
	Direct labor.............................................	$32
	Variable manufacturing overhead..........	$1
	Variable selling and administrative........	$8
	Fixed costs:
	Fixed manufacturing overhead...............	$280,800
	Fixed selling and administrative............	$98,000

** Show ALL work in order to receive full credit!!

1. Unit Product Cost: Variable Costing ____________________

	Variable costing:

2. Unit Product Cost: Absorption Costing__________________

Absorption costing:

3. Prepare an income statement for the month using the contribution format and the variable costing method.

4. Prepare an income statement for the month using the absorption costing method.

Income statements

5. Reconcile the variable costing and absorption costing net operating incomes for the month.

Reconciliation