Kenneth manufacturing company that produces a single product has provided the fo
ID: 2478124 • Letter: K
Question
Kenneth manufacturing company that produces a single product has provided the following data concerning its
most recent month of operations:
Selling price 228
Units in beginning inventory 0
Units produced 5,600
Units sold 5,300
Units in ending inventory 300
Variable costs per unit:
Direct materials 36
Direct labor 21
Variable manufacturing overhead 4
Variable selling and administrative 4
Total 65
Fixed costs:
Fixed manufacturing overhead 201,600
Fixed selling and administrative 37,100
Total 238,700
What is the total period cost for the month under absorption costing and variable costing?
What is the unit product cost for the month under absorption costing and variable costing?
What is the NOI for the month under absorption costing and variable costing?
Explanation / Answer
the total period cost for the month :
under absorption costing = Fixed selling and administrative $37,100
under variable costing = Fixed manufacturing overhead $201,600
+ Fixed selling and administrative $37,100 =$238700
the unit product cost for the month :
under absorption costing = Direct materials $36 + Direct labor $21 + Variable manufacturing overhead 4 + Fixed manufacturing overhead $36 i.e.(201,600/5600) = $97 per unit
under variable costing= Direct materials $36 + Direct labor $21 + Variable manufacturing overhead 4 =$61 per unit
the NOI for the month :
under absorption costing = Unit sold 5300*228 = $1208400 - Product cost 5300*97 = $514100 - Variable selling and administrative cost $4*5300 = $21200 - Fixed selling and administrative $37,100 = $636000
under variable costing = Unit sold 5300*228 = $1208400 - Product cost 5300*61 = $323300 - Variable selling and administrative cost $4*5300 = $21200 - Fixed manufacturing overhead $201,600 - Fixed selling and administrative $37,100 = $625200
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