Brock Company produces and sells an industrial product. The company has just ope

Question

Brock Company produces and sells an industrial product. The company has just opened a new plant to manufacture the product, and the following cost and revenue data have been provided for the first month of the plant's operation. Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: 0 41,000 36,000 84 Variable per unit Fixed (total) $555,000 S 16 4 Manufacturing costs Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per uni S Fixed manufacturing overhead cost (total) $ 738,000 Required 1. Assume that the company uses absorption costing a. Determine the unit product cost. Unit product cost b. Prepare an income statement for the month. (Input all amounts as positive values except losses which should be indicated by a minus sign.) Absorption Costing Income Statement (Click to select) (Click to select) (Click to select) (Click to select) (Click to select)

Explanation / Answer

1.

a. Unit product cost as per Absorption costing = $1746000 / 36000 = $48.50 per unit

b. Income Statement as per Absorption costing:

2.

a. Unit product cost as per Variable costing = $1116000 / 36000 = $31 per unit

b. Income Statement as per Variable costing:

Particulars Amounts $ Direct cost 864000 Manufacturing cost 882000 Cost of production 1746000 Administrative and selling costs 663,000 Cost of goods sold 2409000 Sales 3024000 Less: Cost of goods sold 2409000 Net Income 615,000

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