Monster manufacturing company, which has only one product had provided the follo
ID: 2503537 • Letter: M
Question
Monster manufacturing company, which has only one product had provided the following data concerning its most recent month of operations
Selling price $190
Units in begining inventory 0
Units produced 9500
Units sold 8000
units in ending inventory 1500
Variable cost per unit:
Direct materials $65
Direct labor $39
Variable manufacturing overhead $2.5
Variable selling and admind $11
Fixed costs:
Fixed manufacturing overhead $320,000
Fixed selling and admin $ 123,000
Required
A. Prepare an income statment for the month using variable costing method
B. Prepare an income statment for the month using absorption costing method
Explanation / Answer
Income statment for the month using variable costing method:-
SALES (190*8000) = 1520000
LESS:-VARIABLE COST [(65+39+2.5+11)*8000] = (940000)
LESS:-FIXED COST [320000+123000] = (443000)
PROFIT = 137000
Income statment for the month using absorption costing method:-
SALES(190*9500) = 1805000
LESS:- VARIABLE COST [(65+39+2.5+11)*9500] = (1116250)
LESS:-FIXED COST [320000+123000] = (443000)
PROFIT = 245750