Nelson Corporation, which has only one product, has provided the following data
ID: 2541433 • Letter: N
Question
Nelson Corporation, which has only one product, has provided the following data concerning its most recent month of operations Selling price $ 119 Units in beginning inventory Units produced Units sold Units in ending inventory 370 6,420 6,330 460 Variable costs per unit Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs Fixed manufacturing overhead Fixed selling and administrative $46 $21 2 18 $ $141,240 $ 56,970 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to monthExplanation / Answer
a) Unit product cost under variable costing Direct Material $ 46 Direct Labor $ 21 Variable manufacturing overhead $ 2 Variable S&E $ 18 Total $ 87 Sales $ 753,270 Variable Expenses Direct Material $ 291,180 Direct Labor $ 132,930 Variable manufacturing overhead $ 12,660 Variable S&A $ 113,940 $ 550,710 Contribution Income $ 202,560 Fixed Expenses Manufacturing overhead $ 141,240 S&A $ 56,970 $ 198,210 Net Income $ 4,350 Absorption costing unit product cost b) Direct Material $ 46 Direct Labor $ 21 Variable manufacturing overhead $ 2 Fixed manufacturing overhead $ 22 Total $ 91 Absorption costing income statement Sales $ 753,270 Less: Cost of goods sold $ 576,030 Gross margin $ 177,240 S&A: Variable S&A $ 113,940 Fixed S&A $ 56,970 Net Income $ 6,330
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