Zola Company manufactures and sells one product. The following information perta

Question

Zola Company manufactures and sells one product. The following information pertains to the company's first year of operations Variable cost per unit Direct materials $ 16.50 Fixed costs per year Direct labor Fixed manufacturing overhead Fixed selling and administrative expenses $247,250 $ 280,000 82,500 The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Zola produced 21,500 units and sold 17,200 units. The selling price of the company's product is $62.70 per unit. Required 1. Assume the company uses super-variable costing a. Compute the unit product cost for the year. (Round your answer to 2 decimal places.) t product cost b. Prepare an income statement for the year Zola Company Super-Variable Costing Income Statement Fixed expenses 0

Explanation / Answer

a) Unit product cost under super variable costing :

Direct material = 16.50 per unit

b) Prepare income statement :

Sales (17200*62.70) 1078440 Less: Variable cost (17200*16.50) (283800) Contribution margin 794640 Less: Fixed expenses Direct labour (247250) Fixed manufacturing overhead (280000) Fixed selling and administrative expense (82500) Total fixed expense (609750) Net operating income 184890

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