QUESTION# 3 Zhou Inc. has the following cost data for its past year of operations. Zhou Inc. produces tables and sells them for $150 each. You must show all your work in order to receive all the points available.
$$/ Per unit
Variable Costs:
Direct Materials (DM) $25
Direct Labour (DL) $20
Variable Mfâg Overhead $ 5
Variable Selling & Admin $10
Total Variable costs $60
Fixed Costs:
Fixed Mfâg Overhead $360,000
Fixed Selling & Admin $200,000
Total Fixed Costs $560,000
Unit data
Beginning Inventory 0
Units produced 12,000
Units sold 10,000
Required:
1) Calculate the unit cost per table under Variable Costing.
2) Calculate the unit cost per table under Absorption Costing.
3) Prepare a Contribution Margin format Income Statement using Variable Costing.
4) Prepare a Traditional format income statement using Absorption Costing.
5) Explain why the operating incomes were not the same under the different cost flow assumptions? And reconcile the difference in operating income.
QUESTION# 3 Zhou Inc. has the following cost data for its past year of operations. Zhou Inc. produces tables and sells them for $150 each. You must show all your work in order to receive all the points available.
$$/ Per unit
Variable Costs:
Direct Materials (DM) $25
Direct Labour (DL) $20
Variable Mfâg Overhead $ 5
Variable Selling & Admin $10
Total Variable costs $60
Fixed Costs:
Fixed Mfâg Overhead $360,000
Fixed Selling & Admin $200,000
Total Fixed Costs $560,000
Unit data
Beginning Inventory 0
Units produced 12,000
Units sold 10,000
Required:
1) Calculate the unit cost per table under Variable Costing.
2) Calculate the unit cost per table under Absorption Costing.
3) Prepare a Contribution Margin format Income Statement using Variable Costing.
4) Prepare a Traditional format income statement using Absorption Costing.
5) Explain why the operating incomes were not the same under the different cost flow assumptions? And reconcile the difference in operating income.