Denton Company manufactures and sells a single product. Cost data for the produc

Question

Denton Company manufactures and sells a single product. Cost data for the product are given: Variable cost s per unit: Direct materials Direct labor Variable manufacturing 10 Variable selling and adrministrative Total variable cost per $ 18 unit Fixed coats per month Fixed nanufacturing 63,000 163, 000 Total fixed coat per month $226,000 overhead Fixed selling and adrministrative The product sells for $48 per unit. Production and sales data tor July and August, the first two months of operations, ollow: Units Units July 21,000 17,000 August 21,000 25,000 The company's Accounting Department has prepared the following absorption costing income statements for Juty and August: July August Sales Cost of goods sold Groas margin Selling and adniniatrative expenscS Net operating income $816, 000 1,200,000 323,000 475,000 493,000 197, 000 213,000 $296,000 512, 000 Required: Determine the unit product cost under: a. Absorption costing. b. Variable costing. 2. Prepare contribution format varlable costing Income statements for July and August 3. Reconclile the variable costing and absorption costing net operating Incomes Complete this quesion by entering your answers in the tabs below Required Required Required Reconcile the variable costing and absorption costing net operating incomes. (Enter any losses or deductions as a neg ative value.) Incomes Variable net income (loss Add (deduct) fixed in (released from overhead cost deferred under Ab net ncome (loss Required 2 Required 3

Explanation / Answer

unit product cost :

2. Contribution format income statement

3. Reconcile the absorption costing and the variable costing net operating income figures for each year.

Variable costing Absorption costing Direct material 3 3 Direct labour 10 10 Variable manufacturing overhead 3 3 Fixed manufacturing overhead (63000/21000) 3 Unit product cost 16 19

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