McCracken Aerial, Inc., produces and sells a unique type of TV antenna. The comp
ID: 2352436 • Letter: M
Question
McCracken Aerial, Inc., produces and sells a unique type of TV antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been provided for the first month of the plants operation:
Because the new antenna is unique in design, management is anxious to see how profitable it will be and has asked that an income statement be prepared for the month.
Prepare an income statement for the month. (Input all amounts as positive values except losses which should be indicated by a minus sign.)
Prepare a contribution format income statement for the month. (Input all amounts as positive values except losses which should be indicated by a minus sign.)
Beginning inventory 0 Units produced 49,000 Units sold 44,000 Selling price per unit $ 78 Selling and administrative expenses: Variable per unit $ 3 Fixed (total) $ 563,000 Manufacturing costs Direct materials cost per unit $ 17 Direct labor cost per unit $ 8 Variable manufacturing overhead cost per unit $ 1 Fixed manufacturing overhead cost (total) $ 882,000Explanation / Answer
1.Assume that the company uses absorption costing
a. Determine the unit product cost.
Unit product cost
44
b. Prepare an income statement for the month
sales
3432000
cost of goods sold
1,936,000
gross margin
1,496,000
selling and administrative expenses
695000
net operating income
801,000
2. assume that the company uses variable costing
a. Determine the unit product cotst
unit product cost
26
b. Prepare a contributoin format income statement
sales
3432000
variable expenses
variable cost of goods sold
1144000
variable selling and administrative
132000
1276000
contribution margin
2156000
fixed expenses
fixed manufacturing overhead
882,000
fixed selling and administrative
563,000
1,445,000
net operating income
711,000
1.Assume that the company uses absorption costing
a. Determine the unit product cost.
Unit product cost
44
b. Prepare an income statement for the month
sales
3432000
cost of goods sold
1,936,000
gross margin
1,496,000
selling and administrative expenses
695000
net operating income
801,000
2. assume that the company uses variable costing
a. Determine the unit product cotst
unit product cost
26
b. Prepare a contributoin format income statement
sales
3432000
variable expenses
variable cost of goods sold
1144000
variable selling and administrative
132000
1276000
contribution margin
2156000
fixed expenses
fixed manufacturing overhead
882,000
fixed selling and administrative
563,000
1,445,000
net operating income
711,000