Problem 6-22 Prepare and Reconcile Variable Costing Statements [LO6-1, L06-2, LO
ID: 2426514 • Letter: P
Question
Problem 6-22 Prepare and Reconcile Variable Costing Statements [LO6-1, L06-2, LO6-3] Denton Company manufactures and sells a single product. Cost data for the product are given below: Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $5 10 2 $20 Total variable costs per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative $120,000 166,000 Total fixed cost per month $ 286,000 The product sells for $54 per unit. Production and sales data for July and August, the first two months of operations, are as follows Units Produced 24,000 24,000 Units Sold 20,000 28,000 August The company's Accounting Department has prepared absorption costing income statements for July and August as presented below: July 460,000 620,000 August Sales Cost of goods sold $1,080,000 $1,512,000 644,000 Gross margin Sel 868,000 222,000 ling and administrative expenses 206,000 Net operating income $ 414,000 $ 646,000Explanation / Answer
Answer:3
Reconciliation of variable costing And Absorption Costing Net operating income Particulars July August Variable costing net operating income (loss) 394000 666000 Add (deduct) fixed manufacturing overhead cost deferred in (released from ) inventory under absorption costing 20000 -20000 Absorption costing net operating income (loss) 414000 646000