Brock Company produces and sells an industrial product. Thecompany has just opened a new plant to manufacture the product, andthe following cost and revenue data have been provided for thefirst month of the plantâs operation.
Beginning inventory 0 Units produced 46,000 Units sold 41,000 Selling price per unit $ 80 Selling and administrative expenses: Variable per unit $ 4 Fixed (total) $ 563,000 Manufacturing costs Direct materials cost per unit $ 17 Direct labor cost per unit $ 6 Variable manufacturing overhead cost perunit $ 3 Fixed manufacturing overhead cost(total) $ 874,000
Required:
1. Assume that thecompany uses absorption costing.
a. Determine theunit product cost.
Unitproduct cost $
b. Prepare an income statement for the month. (Input allamounts as positive values except losses which should be indicatedby a minus sign.)
Absorption Costing Income Statement (Click to select)Selling and administrativeexpensesSalesGross marginCost of goods manufacturedNet operatingincome (loss) $ (Click to select)SalesNet operating income (loss)Costof goods soldSelling and administrative expensesGross margin (Click to select)Contribution marginGross margin (Click to select)Gross marginNet operating income(loss)Selling and administrative expensesSalesCost of goodssold (Click to select)Net operating lossNet operatingincome $
2. Assume that thecompany uses variable costing.
a. Determine theunit product cost.
Unitproduct cost $
b. Prepare a contribution format income statement for the month.(Input all amounts as positive values except losses whichshould be indicated by a minus sign.)
Variable Costing Income Statement (Click to select)Variable cost of goods soldVariableselling and administrative expensesContribution marginFixedmanufacturing overheadFixed selling and administrative expensesNetoperating income (loss)Sales $ Variable expenses: (Click to select)Netoperating income (loss)Fixed manufacturing overheadSalesVariableselling and administrative expensesVariable cost of goodssoldContribution marginFixed selling and administrativeexpenses $ (Click to select)Fixedmanufacturing overheadVariable cost of goods soldVariable sellingand administrative expensesFixed selling and administrativeexpensesSalesNet operating income (loss)Contribution margin (Click to select)Gross marginContribution margin Fixed expenses: (Click to select)Fixedselling and administrative expensesNet operating income(loss)Contribution marginVariable selling and administrativeexpensesSalesFixed manufacturing overheadVariable cost of goodssold (Click to select)Netoperating income (loss)Variable selling and administrativeexpensesContribution marginVariable cost of goods soldFixedmanufacturing overheadSalesFixed selling and administrativeexpenses (Click to select)Net operating lossNet operatingincome $
Brock Company produces and sells an industrial product. Thecompany has just opened a new plant to manufacture the product, andthe following cost and revenue data have been provided for thefirst month of the plantâs operation.
| Beginning inventory | 0 | |
| Units produced | 46,000 | |
| Units sold | 41,000 | |
| Selling price per unit | $ | 80 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 4 |
| Fixed (total) | $ | 563,000 |
| Manufacturing costs | ||
| Direct materials cost per unit | $ | 17 |
| Direct labor cost per unit | $ | 6 |
| Variable manufacturing overhead cost perunit | $ | 3 |
| Fixed manufacturing overhead cost(total) | $ | 874,000 |
| Required: |
| 1. | Assume that thecompany uses absorption costing. |
| a. | Determine theunit product cost. |
| Unitproduct cost | $ |
| b. | Prepare an income statement for the month. (Input allamounts as positive values except losses which should be indicatedby a minus sign.) |
| Absorption Costing Income Statement | |
| (Click to select)Selling and administrativeexpensesSalesGross marginCost of goods manufacturedNet operatingincome (loss) | $ |
| (Click to select)SalesNet operating income (loss)Costof goods soldSelling and administrative expensesGross margin | |
| (Click to select)Contribution marginGross margin | |
| (Click to select)Gross marginNet operating income(loss)Selling and administrative expensesSalesCost of goodssold | |
| (Click to select)Net operating lossNet operatingincome | $ |
| 2. | Assume that thecompany uses variable costing. |
| a. | Determine theunit product cost. |
| Unitproduct cost | $ |
| b. | Prepare a contribution format income statement for the month.(Input all amounts as positive values except losses whichshould be indicated by a minus sign.) |
| Variable Costing Income Statement | ||
| (Click to select)Variable cost of goods soldVariableselling and administrative expensesContribution marginFixedmanufacturing overheadFixed selling and administrative expensesNetoperating income (loss)Sales | $ | |
| Variable expenses: | ||
| (Click to select)Netoperating income (loss)Fixed manufacturing overheadSalesVariableselling and administrative expensesVariable cost of goodssoldContribution marginFixed selling and administrativeexpenses | $ | |
| (Click to select)Fixedmanufacturing overheadVariable cost of goods soldVariable sellingand administrative expensesFixed selling and administrativeexpensesSalesNet operating income (loss)Contribution margin | ||
| (Click to select)Gross marginContribution margin | ||
| Fixed expenses: | ||
| (Click to select)Fixedselling and administrative expensesNet operating income(loss)Contribution marginVariable selling and administrativeexpensesSalesFixed manufacturing overheadVariable cost of goodssold | ||
| (Click to select)Netoperating income (loss)Variable selling and administrativeexpensesContribution marginVariable cost of goods soldFixedmanufacturing overheadSalesFixed selling and administrativeexpenses | ||
| (Click to select)Net operating lossNet operatingincome | $ | |
Related questions
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plantâs operation:
| Beginning inventory | 0 | |
| Units produced | 46,000 | |
| Units sold | 41,000 | |
| Selling price per unit | $ | 82 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 558,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 15 |
| Direct labor cost per unit | $ | 7 |
| Variable manufacturing overhead cost per unit | $ | 1 |
| Fixed manufacturing overhead cost (per month) | $ | 782,000 |
Management is anxious to assess the profitability of the new camp cot during the month of May.
Required:
1. Assume that the company uses absorption costing.
a. Determine the unit product cost.
b. Prepare an income statement for May.
2. Assume that the company uses variable costing.
a. Determine the unit product cost.
b. Prepare a contribution format income statement for May.
The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:
| Beginning inventory | 0 | |
| Units produced | 34,000 | |
| Units sold | 25,900 | |
| Selling price per unit | $ | 482 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 16 |
| Fixed per year | $ | 362,600 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 240 |
| Direct labor cost per unit | $ | 56 |
| Variable manufacturing overhead cost per unit | $ | 34 |
| Fixed manufacturing overhead per year | $ | 578,000 |
Assume that direct labor is a variable cost.
Required:
a. Compute the unit product cost under both the absorption costing and variable costing approaches.
b. Prepare an income statement for the year using absorption costing.
c. Prepare an income statement for the year using variable costing.
d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.
