McCracken Aerial, Inc., produces and sells a unique type of TV antenna. The comp
ID: 2425634 • 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 plant’s operation:
Beginning inventory 0
Units produced 39,250
Units sold 35,000
Selling price per unit $ 90
Selling and administrative expenses:
Variable per unit $ 6
Fixed (total) $ 525,000
Manufacturing costs Direct materials cost per unit $ 18.0
Direct labor cost per unit $ 9.0
Variable manufacturing overhead cost per unit $ 3
Fixed manufacturing overhead cost (total) $ 981,250
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.
Determine the unit product cost. (Do not round intermediate calculations and round your final answer to 1 decimal place.)
b.
Prepare an income statement for the month.
2.
Determine the unit product cost. (Do not round intermediate calculations and round your final answer to 1 decimal place.)
Prepare a contribution format income statement for the month.
Assume that the company uses absorption costing.Explanation / Answer
1./ A./
B./
COST OF GOODS SOLD
= BEGINNING INVENTORY + TOTAL MANUFACTURING COST - ENDING INVENTORY
= 0 + $2158750 - [(39250 - 35000) * $55]
= $2158750 - $233750
= $1925000
2./ A./
B./
DIRECT MATERIAL (39250 * $18) $706500 DIRECT LABOUR (39250 * $9) 353250 VARIABLE MANUFACTURING OVERHEAD (39250 * $3) 117750 FIXED MANUFACTURING OVERHEAD 981250 TOTAL PRODUCT COST 2158750 NUMBER OF UNITS PRODUCED 39250 UNIT PRODUCT COST $55