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a) What was the unit product cost in each year under variable costing?
The manufacturing cost of $6 per unit is the unit product cost under variable costing in both
years.
b) Prepare new income statements for each year using variable costing.
c) Reconcile the absorption costing and variable costing net operating income for each year.
a) What is the unit product cost for the month under variable costing?
Variable Costing = Direct Materials + Direct Labor + Variable MOH
= 26 + 37 + 5 = $68
b) What is the unit product cost for the month under absorption costing?
Absorption Costing = Direct Materials + Direct Labor + Variable MOH + Fixed MOH
= 26 + 37 + 5 + 5= $73
c) Prepare a contribution format income statement for the month using variable costing.
d) Prepare a traditional format income statement for the month using absorption costing.
3. Leibson Co, which has only one product, has provided the following data concerning its most
recent month of operations:
a) What is the unit product cost for the month under variable costing?
Variable Costing = Direct Materials + Direct Labor + Variable MOH
= 41 + 28 + 3 = $72
b) What is the unit product cost for the month under absorption costing?
Absorption Costing = Direct Materials + Direct Labor + Variable MOH + Fixed MOH
= 41 + 28 + 3 + 7 = $79
c) Prepare a contribution format income statement for the month using variable costing.
e) Reconcile the absorption costing and variable costing net operating income for the month.
4. Qiu Company, which has only one product, has provided the following data concerning its
most recent month of operations:
a) What is the unit product cost for the month under variable costing?
Variable Costing = Direct Materials + Direct Labor + Variable MOH
= 31 + 37 + 2 = $70
b) Prepare a contribution format income statement for the month using variable costing.
Sales
Variable Expenses
Variable COGS
Variable S&A
Contribution Margin
Fixed Expenses
Fixed MOH
Fixed S&A
Net Operation Income
374,400
($117 x 3200)
(224,000)
(22,400)
128,000
($70 x 3200)
($7 x 3200)
(112,200)
(6,400)
9,400
4
9,400
3,400 ($34 x 100 units)
12,800