Maher Corporation, which has only one product, has provided the following data c

Question

Maher Corporation, which has only one product, has provided the following data concerning its most recent month of operations: $185 Units in beginning inventory Units produced Units sold Units in ending inventory 3,690 3,000 690 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense 46 20 Fixed costs Fixed manufacturing overhead Fixed selling and administrative $129,150 9,000 Required: a. What is the unit product cost for the month under variable costing? b. What is the unit product cost for the month under absorption costing? c. Prepare a co d. Prepare an income statement for the month using absorption costing. e. Reconcile the variable costing and absorption costing net operating incomes for the month. n format income statement for the month using variable costing Complete this question by entering your answers in the tabs below. What is the unit product cost for the month under variable costing?

Explanation / Answer

a). Unit product cost under variable costing:
Direct Material                      $46
Direct Labour                       $50
Variable mfr overhead            $9
Total                                   $105

b). Unit product cost under absorbtion costing:
Direct Material                    $46
Direct Labour                      $50
Variable mfr overhead          $9
Fixed overhead                   $35          (129150/3690)
Total                                 $140

c). Income Statement under variable costing:
Sales                              $555000         (185*3000)
Variable Costs                 $315000         (105*3000)
Variable selling                $60000           (20*3000)
Contribution Margin          $180000
Fixed mfr cost                 $129150
Fixed Selling                   $9000
Net Income                     $41850

d). Income Statement under absorbtion costing:
Sales                              $555000         (185*3000)
Variable Costs                 $315000         (105*3000)
Fixed manufacturing         $105000          (35*3000)
Gross Margin            $135000
Variable selling                $60000            (20*3000)
Fixed selling                    $9000
Net Income                     $66000

e). Reconciliation:
Net Income as per Variable Costing             $41850
Add: Fixed mfr cost defferred                      $24150   (35*690)
Net Income as per Absorbtion costing         $66000

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