*E19-17 Compute product cost and prepare an income statement under variable and
ID: 2376714 • Letter: #
Question
*E19-17 Compute product cost and prepare an income statement under variable and absorption costing. (SO 6), AP Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs. Variable Cost per Unit Direct materials $7.50 Direct labor %u2002%u2002%u2002$2.45 Variable manufacturing overhead %u2002%u2002%u2002$5.75 Variable selling and administrative expenses %u2002%u2002%u2002$3.90 Fixed Costs per Year Fixed manufacturing overhead $234,650 Fixed selling and administrative expenses $240,100 Polk Company sells the fishing lures for $25. During 2012, the company sold 80,000 lures and produced 95,000 lures. Instructions (a) Assuming the company uses variable costing, calculate Polk's manufacturing cost per unit for 2012. (b) Prepare a variable costing income statement for 2012. (c) Assuming the company uses absorption costing, calculate Polk's manufacturing cost per unit for 2012. (d) Prepare an absorption costing income statement for 2012. Compute product cost and prepare an income statement under variable and absorption costing. (SO 6), AP Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs. Polk Company sells the fishing lures for $25. During 2012, the company sold 80,000 lures and produced 95,000 lures. Instructions (a) Assuming the company uses variable costing, calculate Polk's manufacturing cost per unit for 2012. (b) Prepare a variable costing income statement for 2012. (c) Assuming the company uses absorption costing, calculate Polk's manufacturing cost per unit for 2012. (d) Prepare an absorption costing income statement for 2012.
Explanation / Answer
(a) Assuming the company uses variable costing, calculate Polk's manufacturing cost per unit for 2012. Direct materials $7.50 Direct labor $2.45 Variable manufacturing overhead $5.75 Manufacturing cost per unit $15.70 (b) Prepare a variable costing income statement for 2012. Polks Company Income Statement For the Year Ended December 31,2012 Variable Costing Sales $ 2,000,000.00 Variable Manufacturing Cost $ 1,491,500.00 Less: Ending Inventory $ 235,500.00 $ 1,256,000.00 Contribution $ 744,000.00 Variale Admin & Selling Expenses $ 312,000.00 Fixed Overhead $ 474,750.00 $ 786,750.00 Net income (Loss) $ (42,750.00) (c) Assuming the company uses absorption costing, calculate Polk's manufacturing cost per unit for 2012. Direct materials $7.50 Direct labor $2.45 Variable manufacturing overhead $5.75 Fixed Manufacturing Overhead $2.47 Manufacturing cost per unit $18.17 (d) Prepare an absorption costing income statement for 2012. Polks Company Income Statement For the Year Ended December 31,2012 AbsorptionCosting Sales $ 2,000,000.00 Manufacturing Cost $ 1,726,150.00 Less: Ending Inventory $ 272,550.00 $ 1,453,600.00 Cost of good sold $ 546,400.00 Variale Admin & Selling Expenses $ 312,000.00 Fixed Admin & Selling Expenses $ 240,100.00 $ 552,100.00 Net income (Loss) $ (5,700.00)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.