What is the product cost per unit using absorption costing? Using variable costi

Question

What is the product cost per unit using absorption costing? Using variable costing?

What is the value of the ending inventory using absorption costing? Using variable costing?

Prepare an income statement for the month using the absorption costing method (traditional income statement).

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

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

$137 Units in beginning inventory 3,000 2,900 100 Units in ending inventory Variable costs per ui it Direct materials Direct labor.. Variable manufacturing overhead Variable selling and administrative $40 $53 $6 $9 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $69.000 $5,800

Explanation / Answer

Construct The Absorption Costing Unit Product Cost Year 1 Direct Material 40 Direct labour 53 Variable Manufacturing overheads 6 Fixed Manufacturing overheads 23.00 (69000 /3000 units) Absorption costing unit prroduct cost 122.00 Ending inventory (100 units @ 122): 12200 Compute the Variable costing Unit Product cost Year 1 Direct Material 40 Direct labour 53 Variable Manufacturing overheads 6 Variable costing unit prroduct cost 99 Ending inventory (100 units @*99): 9900 Construct the Absorption Costing Income Statement Year 1 Sales $397,300 Cost of Goods sold 353800 Gross Margin $43,500 Selling and distribution expense 31,900 Net operating income 11,600 Construct The Variable Costing Income Statement YEAR 1 Sales 397,300 Less: Variable cost    variable cost of goods sold 287,100    Variable selling expense 26,100 313,200 Contribution margin 84,100 Fixed expense:    Fixed Manufacturing overheads 69,000    Fixed selling expense 5,800 Net operating Income 9,300 Reconciliation Statement: Net income as per Vriable costing 9300 Add: Ending inventory fixed OH deferred 2300 ( 100 units @23) Income under Absorption costing 11600

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