Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Di

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Denton Company Manufactures And Sells A Single Product Cost Data For The Product Are Given Variable Costs Per Unit Di 1 (379.24 KiB) Viewed 69 times

Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 6 Direct labor 9 Variable manufacturing overhead 4 Variable selling and administrative 2 Total variable cost per unit $ 21 Fixed costs per month: Fixed manufacturing overhead $ 126,000 Fixed selling and administrative 166,000 Total fixed cost per month $ 292,000 The product sells for $47 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold 21,000 17,000 July August 21,000 25,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July August Sales $ 799,000 $ 1,175,000 Cost of goods sold 425,000 625,000 Gross margin 374,000 550,000 Selling and administrative expenses 200,000 216,000
Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the unit product cost under: (a) Absorption costing, (b) Variable costing. Unit Product Cost a. Absorption costing b. Variable costing 23 x 20
Prepare variable costing income statements for July and August. Denton Company Variable Costing Income Statement July August Sales $ 935,000 $ 875,000 Variable expenses: Variable cost of goods sold 340,000 500,000 Variable selling and administrative expenses 17,000 Total variable expenses 357,000 Contribution margin 578,000 Fixed expenses: Fixed manufacturing overhead 63,000 Fixed selling and administrative expenses 169,000 Total fixed expenses 232,000 Net operating income (loss) $ 346,000 $ 25,000 X 525,000 350,000 63,000 X 169,000 232,000 118,000
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Reconcile the variable costing and absorption costing net operating incomes. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes July August 293,000 Variable costing net operating income (loss) $ 125,000 $ Add (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costing 12,000 X Absorption costing net operating income (loss) $ 137,000 $ (12,000) X 28,100 X