Answer Happy

Eel Ltd is a company that manufactures and sells swimming goggles. It indicates the following data for the current year of operation: per unit Direct materials $ Direct labour $ $ Variable manufacturing overhead Variable selling and administrative Salaries-Production manager $ $60,000 $90,000 Salaries-Production supervisors Depreciation of Factory equipment $ 30,000 Salaries-Sales manager $ 40,000 Depreciation of machinery $ 30,000 During the year, the company produced 21,000 units and sold 16,000 units of its products with the selling price of $55 per unit. Required (show your workings): (a) Using absorption costing, compute the product cost per unit (8 marks) (b) Prepare an income statement using absorption costing (8 marks) (c) Using variable costing, compute the product cost per unit (6 marks) (d) Prepare an income statement using variable costing (10 marks) (e) Compare the net operating income of absorption costing and operating income of variable costing and explain why they are different. (3 marks) 10.00 8.00 3.00 7.00