Coverall Inc. produces and sells a unique type of case for a standard size table

Question

Coverall Inc. produces and sells a unique type of case for a standard size tablet computer that is guaranteed waterproof but still allows for regular functionality of the tablet. The company has just opened a new plant to manufacture these cases, and the following cost and revenue data have beern provided for the first month of the plant's operation in the form of a worksheet: Beginning inventory Units produced Units sold Selling price per unit 50,000 35,000 96 Selling and administrative expenses Variable per unit Fixed (total) $ 735,000 Manufacturing costs: $ Direct materials cost per unit Direct labour cost per uni$ Variable manufacturing 12 overhead cost per unit Fixed manufacturing overhead $1,050,000 cost (total) Since the new case 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. Required 1. Assume that the company uses absorption costing a. Determine the unit product cost. ni uc Prepare an income statement for the month. ales Cost of goods sold 0 2. Assume that the company uses variable costing a. Determine the unit product cost. ni uc

Explanation / Answer

a) Absorption costing :

unit product cost :

Income statement :

b) variable costing :

unit product cost :

Contribution margin Income statement :

Direct material 17 Direct labour 12 Variable manufacturing overhead 5 Fixed manufacturing overhead (1050000/50000) 21 Unit product cost 55

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