ABC Company manufactures and sells one product. Sales andproduction information is contained below.· Selling price perunit $62 · Variablemanufacturing costs per unit produced (DM, DL, and variableMOH) $42· Variableoperating expenses per unit sold $9· Fixedmanufacturing overhead (MOH) in total for the year $112,000· Fixed operatingexpenses in total for the year $40,000· Units producedduring the year 14,000· Units sold duringthe year 15,000 (a) Prepare the income statement using variablecosting. (b) Prepare the income statement using absorption costing.(c) Please explain the difference in operating income between thetwo methods.
ABC Company manufactures and sells one product. Sales andproduction information is contained below.· Selling price perunit $62 · Variablemanufacturing costs per unit produced (DM, DL, and variableMOH) $42· Variableoperating expenses per unit sold $9· Fixedmanufacturing overhead (MOH) in total for the year $112,000· Fixed operatingexpenses in total for the year $40,000· Units producedduring the year 14,000· Units sold duringthe year 15,000 (a) Prepare the income statement using variablecosting. (b) Prepare the income statement using absorption costing.(c) Please explain the difference in operating income between thetwo methods.
Related questions
Rabin Ltd uses a perpetual FIFO inventory system and hascompiled the following cost information for the year ended December31, 2017. Opening inventory consisted of 100 units. The cost perunit of opening inventory is $100 DM, $60 DL and $110 MOH (of which20% is variable). Robin produced 1,400 units and sold 1,250 unitsduring 2017. The selling price per unit is $320.
| Direct materials | $135,000 |
| Wages for assembly workers | 104,000 |
| Utilities on factory (of which 25,000 is fixed) | 68,000 |
| Factory supervisor salary | 50,000 |
| Bookkeeper salary | 35,000 |
| Office rent | 60,000 |
| Amortization of factory and equipment | 45,000 |
Answer the following for the year ended December 31, 2017 (roundyour answer to the nearest unit or dollar and use the roundedanswer for subsequent calculations):
(a) How many units are left in ending inventory at December 31,2017? units
(b) What is the cost per unit in ending inventory under:
absorptioncosting $/ unit?
variablecosting $/ unit?
throughputcosting $/ unit?
(c) Calculate the total cost of opening inventory using:
absorption costing $?
variablecosting $?
throughputcosting $?
(d) Calculate: gross profit $?
contribution margin $?
throughputmargin $?
(e) Net income will be greatest under whichcosting method? Absorption costing or Variable costing
(f) Net income will be lowest under whichcosting method? Absorption costing or Variable costing
| 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.)
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