LIFESAVER! Cheddar Creek Corporation manufactures and sells a single product. Co
ID: 2435395 • Letter: L
Question
LIFESAVER!
Cheddar Creek Corporation manufactures and sells a single product. Cost data for the product and the company follow:
Prepare the cost of goods section of the income statement for each month using:
a) Absorption Costing
b) Variable Costing
LIFESAVER!
Cheddar Creek Corporation manufactures and sells a single product. Cost data for the product and the company follow:
Sales Price Per Unit: $ 46.00 Variable Costs Per Unit: Direct Materials $ 10.40 Direct Labor 8.20 Variable Manufacturing Overhead 2.90 Variable Selling and Admininstrative 5.30 Total Variable Costs Per Unit $ 26.80 Fixed Costs Per Month: Fixed Manufacturing Overhead $ 283,800 Fixed Selling and Administrative 192,500 Total Fixed Cost Per Month $ 476,300 Production per month 27,500 units June Sales 24,200 units July Sales 30,800 unitsExplanation / Answer
Absorption Costing Unit Variable Cost : Direct Material 10.40 Direct Labor 8.20 Variable Manufacturing OH 2.90 Variable Selling & Admin OH 5.30 Fixed OH 17.32 (476,500 / 27,500 ) Absorption Costing Unit Product Cost 44.12 Cost of Goods sold June - 24,200 * 44.12 1,067,704.00 July - 30,800 * 44.12 1,358,896.00 Variable Costing Unit Variable Cost : Direct Material 10.40 Direct Labor 8.20 Variable Manufacturing OH 2.90 Variable Selling & Admin OH 5.30 Variable Costing per Unit 26.80 Cost of Goods Sold June - 24200 * 26.8 648,560.00 July - 30800 * 26.8 825,440.00
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