The EG Company produces andsells single product. The following data refer to the year justcompleted:
Beginninginventory 0 Units produced 29,100 Units sold 26,600 Selling price perunit $ 435 Selling andadministrative expenses: Variable perunit $ 24 Fixed (total) $ 345,800 Manufacturingcosts: Direct materialscost per unit $ 239 Direct labor costper unit $ 55 Variablemanufacturing overhead cost per unit $ 34 Fixed manufacturingoverhead (total) $ 582,000
Assume that direct labor is a variable cost.
Required:
a. Compute the cost of a single unit of product under both theabsorption costing and variable costing approaches. (Omitthe "$" sign in your response.)
b. Prepare an income statement for the year using absorptioncosting. (Input all amounts as positive values exceptlosses which should be indicated by a minus sign. Omit the "$" signin your response.)
c. Prepare a contribution format income statement for the yearusing variable costing. (Input all amounts as positivevalue
d. Reconcile the absorption costing and variable costing netoperating income figures in (b) and (c) above. (Omit the"$" sign in your response.)
| The EG Company produces andsells single product. The following data refer to the year justcompleted: |
| Beginninginventory | 0 | |
| Units produced | 29,100 | |
| Units sold | 26,600 | |
| Selling price perunit | $ | 435 |
| Selling andadministrative expenses: | ||
| Variable perunit | $ | 24 |
| Fixed (total) | $ | 345,800 |
| Manufacturingcosts: | ||
| Direct materialscost per unit | $ | 239 |
| Direct labor costper unit | $ | 55 |
| Variablemanufacturing overhead cost per unit | $ | 34 |
| Fixed manufacturingoverhead (total) | $ | 582,000 |
Assume that direct labor is a variable cost. |
| Required: |
| a. | Compute the cost of a single unit of product under both theabsorption costing and variable costing approaches. (Omitthe "$" sign in your response.)
|
Related questions
| The EG Company produces andsells single product. The following data refer to the year justcompleted: |
| Beginninginventory | 0 | |
| Units produced | 34,500 | |
| Units sold | 26,800 | |
| Selling price perunit | $ | 490 |
| Selling andadministrative expenses: | ||
| Variable perunit | $ | 16 |
| Fixed (total) | $ | 616,400 |
| Manufacturingcosts: | ||
| Direct materialscost per unit | $ | 254 |
| Direct labor costper unit | $ | 55 |
| Variablemanufacturing overhead cost per unit | $ | 33 |
| Fixed manufacturingoverhead (total) | $ | 552,000 |
Assume that direct labor is a variable cost. |
| Required: |
| a. | Compute the cost of a single unit of product under both theabsorption costing and variable costing approaches. (Omitthe "$" sign in your response.) |
| Cost perunit | |
| Absorptioncosting | $ |
| Variablecosting | $ |
| b. | Prepare an income statement for the year using absorptioncosting. (Input all amounts as positive values exceptlosses which should be indicated by a minus sign. Omit the "$" signin your response.) |
| Absorption Costing Income Statement | |||
| (Click toselect)Gross marginNet operating income (loss)Selling andadministrative expensesSalesCost of goods sold | $ | ||
| (Click toselect)Selling and administrative expensesNet operating income(loss)Gross marginSalesCost of goods sold | |||
| (Click toselect)Gross marginSelling and administrative expensesCost of goodssoldSalesNet operating income (loss) | |||
| (Click to select)Netoperating income (loss)SalesSelling and administrativeexpensesGross marginCost of goods sold | |||
| (Click toselect)Selling and administrative expensesNet operating income(loss)SalesCost of goods soldGross margin | $ | ||
| c. | Prepare a contribution format income statement for the yearusing variable costing. (Input all amounts as positivevalues except losses which should be indicated by a minus sign.Omit the "$" sign in your response.) |
| Variable Costing Income Statement | ||
| (Click to select)Netoperating income (loss)Variable selling and administrativeexpensesVariable cost of goods soldManufacturingoverheadContribution marginSalesSelling and administrativeexpenses | $ | |
| Variableexpenses: | ||
| (Click toselect)Contribution marginSalesFixed manufacturing overheadVariablecost of goods soldNet operating incomeVariable selling andadministrative expensesFixed selling and administrativeexpenses | $ | |
| (Click to select)Fixedselling and administrative expensesContribution marginVariableselling and administrative expensesSalesNet operating incomeFixedmanufacturing overheadVariable cost of goods sold | ||
| (Click toselect)Variable cost of goods soldManufacturingoverheadContribution marginSelling and administrative expensesNetoperating income (loss)Variable selling and administrativeexpensesSales | ||
| Fixed expenses: | ||
| (Click to select)Fixedselling and administrative expensesVariable cost of goodssoldSalesNet operating incomeContribution marginFixed manufacturingoverheadVariable selling and administrative expenses | ||
| (Click to select)Variablecost of goods soldContribution marginFixed manufacturingoverheadVariable selling and administrative expensesSalesNetoperating incomeFixed selling and administrative expenses | ||
| (Click toselect)Variable selling and administrative expensesSelling andadministrative expensesManufacturing overheadContributionmarginVariable cost of goods soldSalesNet operating income(loss) | $ | |
| d. | Reconcile the absorption costing and variable costing netoperating income figures in (b) and (c) above. (Omit the"$" sign in your response.) |
| Reconciliation of Variable Costing and Absorption Costing NetOperating Incomes | |
| Net operating incomeunder variable costing | $ |
| (Click toselect)DeductAdd: (Click to select)Fixed manufacturing overheadcosts released from inventory under absorption costingFixedmanufacturing overhead costs deferred in inventory under absorptioncosting | |
| Net operating incomeunder absorption costing | $ |
The Dorset Corporation produces and sells a single product. Thefollowing data refer to the year just completed:
| Beginning inventory | 0 | |
| Units produced | 29,500 | |
| Units sold | 20,400 | |
| Selling price per unit | $ | 469 |
| Selling and administrativeexpenses: | ||
| Variable per unit | $ | 19 |
| Fixed per year | $ | 346,800 |
| Manufacturing costs: | ||
| Direct materials cost perunit | $ | 203 |
| Direct labor cost per unit | $ | 50 |
| Variable manufacturing overheadcost per unit | $ | 30 |
| Fixed manufacturing overhead peryear | $ | 442,500 |
Assume that direct labor is a variable cost.
Required:
a. Compute the unit product cost under both the absorptioncosting and variable costing approaches.
b. Prepare an income statement for the year using absorptioncosting.
c. Prepare an income statement for the year using variablecosting.
d. Reconcile the absorption costing and variable costing netoperating income figures in (b) and (c) above.
Maga Company, which has only one product, has provided thefollowing data concerning its most recent month of operations: |
| Selling price | $ | 185 |
| Units in beginninginventory | 0 | |
| Units produced | 3,690 | |
| Units sold | 3,000 | |
| Units in endinginventory | 690 | |
| Variable costs perunit: | ||
| Directmaterials | $ | 46 |
| Direct labor | $ | 50 |
| Variablemanufacturing overhead | $ | 9 |
| Variable selling andadministrative | $ | 20 |
| Fixed costs: | ||
| Fixed manufacturingoverhead | $ | 129,150 |
| Fixed selling andadministrative | $ | 9,000 |
| Required: |
| a. | What is the unit product cost for the month under variablecosting? (Do not round intermediate calculations. Omit the"$" sign in your response.) |
| Cost perunit | |
| Variablecosting | $ |
| b. | What is the unit product cost for the month under absorptioncosting? (Omit the "$" sign in your response.) |
| Cost perunit | |
| Absorptioncosting | $ |
| c. | Prepare a contribution format income statement for the monthusing variable costing. (Input all amounts as positivevalues except losses which should be indicated by a minus sign.Omit the "$" sign in your response.) |
| Variable Costing Income Statement | ||
| (Click toselect)Variable selling and administrative expensesSelling andadministrative expensesVariable cost of goods soldContributionmarginNet operating income (loss)Manufacturing overheadSales | $ | |
| Variableexpenses: | ||
| (Click to select)DirectmaterialsNet operating incomeContribution marginSalesVariableselling and administrative expensesDirect laborVariable cost ofgoods sold | $ | |
| (Click to select)Netoperating incomeDirect materialsVariable selling and administrativeexpensesDirect laborSalesVariable cost of goods soldContributionmargin | ||
| (Click toselect)Variable selling and administrative expensesNet operatingincome (loss)Variable cost of goods soldContributionmarginSalesManufacturing overheadSelling and administrativeexpenses | ||
| Fixed expenses: | ||
| (Click toselect)Contribution marginFixed selling and administrativeexpensesFixed manufacturing overheadSalesVariable selling andadministrative expensesVariable cost of goods soldNet operatingincome | ||
| (Click toselect)SalesContribution marginNet operating incomeFixedmanufacturing overheadVariable selling and administrativeexpensesFixed selling and administrative expensesVariable cost ofgoods sold | ||
| (Click toselect)Variable cost of goods soldManufacturing overheadNetoperating income (loss)Selling and administrativeexpensesContribution marginVariable selling and administrativeexpensesSales | $ | |
| d. | Prepare an income statement for the month using absorptioncosting. (Input all amounts as positive values exceptlosses which should be indicated by a minus sign. Omit the "$" signin your response.) |
| Absorption Costing Income Statement | |||
| (Click toselect)SalesGross marginNet operating income (loss)Fixed sellingand administrative expensesCost of goods soldVariable selling andadministrative expenses | $ | ||
| (Click toselect)Fixed selling and administrative expensesVariable sellingand administrative expensesGross marginCost of goods soldSalesNetoperating income (loss) | |||
| (Click toselect)SalesNet operating income (loss)Gross marginFixed sellingand administrative expensesVariable selling and administrativeexpensesCost of goods sold | |||
| Selling andadministrative expenses: | |||
| (Click toselect)Fixed selling and administrative expensesGross marginCost ofgoods soldVariable selling and administrative expensesNet operatingincome (loss)Sales | $ | ||
| (Click toselect)Fixed selling and administrative expensesSalesCost of goodssoldNet operating income (loss)Variable selling and administrativeexpensesGross margin | |||
| (Click toselect)Cost of goods soldSalesFixed selling and administrativeexpensesVariable selling and administrative expensesNet operatingincome (loss)Gross margin | $ | ||
| e. | Reconcile the variable costing and absorption costing netoperating incomes for the month. (Omit the "$" sign in yourresponse.) |
| Reconciliation of Variable Costing and Absorption Costing NetOperating Incomes | |
| Variable costing netoperating income | $ |
| (Click toselect)AddDeduct: (Click to select)Fixed manufacturing overheadcosts deferred in inventory under absorption costingFixedmanufacturing overhead costs released from inventory underabsorption costing | |
| Absorption costingnet operating income | $ |
