Managerial Accounting 4B Test #2 (Ch, 5, 6, 7) Name Part 2. Problems. There are

Question

Managerial Accounting 4B Test #2 (Ch, 5, 6, 7) Name Part 2. Problems. There are three problems. Each one is worth thev attach extra to the problem number. Show all work for complete credit. Yougradleg you so desire. Please be NEAT when writing your answers. Ic answers. (30 points possible) e score indicated next it. Y 1. (8 points) Penny Black Ltd, which has only one product, has provided the f data concerning its most recent month of operations: Selling price.. $98 Units in beginning inventory Units produced Units sold. Units in ending inventory 0 25,000 21,000 4,000 Variable costs per unit: Direct materials.... Direct labor.. Variable manufacturing overhead Variable selling and administrative.. S34 $20 $8 $4 Fixed costs: Fixed manufacturing overhead.... $235,000 Fixed selling and administrative $160,000 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 an income statement for the month using the contribution format and the variable costing method d. Prepare an income statement for the month using the traditional format and the absorption costing method.

Explanation / Answer

a)

B)

C)

D)

Notice that the fixed manufacturing overhead cost has not been included while computing the cost of one unit under variable costing system.

Selling and administrative expenses (both variable and fixed) are not relevant for the computation of unit product cost.

Computation of Unit Product Cost Variable Costing Direct Meterial $                   34.00 Direct Labour $                   20.00 Variable Manufactoring Overhead $                      8.00 Unit Product Cost $                   62.00

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