Absorption and Variable Costing Income Statements for Two Months and Analysis Du
ID: 2566330 • Letter: A
Question
Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 33,400 hats, of which 31,400 were sold. Operating data for the month are summarized as follows Sales Manufacturing costs $282,600 $170,340 Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost 43,420 20,040 16,700 250,500 Selling and administrative expenses: Variable $15,700 Fixed 11,460 27,160 During August, Head Gear Inc. manufactured 29,400 designer hats and sold 31,400 hats. Operating data for August are summarized as follows: Sales Manufacturing costs $282,600 Direct materials Direct labor Variable manufacturing cost Fixed manufacturing cost $149,940 38,220 17,640 16,700 222,500 Selling and administrative expenses: Variable $15,700 Fixed 11,460 27,160Explanation / Answer
Caclulation of Unit Cost of Production by using Variable Costing Particulars Amount Cost per Unit Units Total Cost Variable Cost Per Unit $ 5.10 33,400 $ 1,70,340.00 Direct Labour $ 1.30 33,400 $ 43,420.00 Variable Manufacturing Cost $ 0.60 33,400 $ 20,040.00 Total Manufacturing Variable Cost $ 7.00 $ 2,33,800.00 CALCULATION OF VALUE OF CLOSING STOCK FOR 2000 Units Closing Stock Value = (2000 units * $ 7.00) 14000 VARIABLE COSTING INCOME STATEMENT Per unit Cost Amount Sales $ 2,82,600.00 Less: Variable Cost of Goods Sold Inventory, August 1 $ 14,000.00 Add: Vriable Cost of Goods Manufactured(29,400 Units *$ 7) $ 2,05,800.00 Total Variable Cost of Goods Sold $ 2,19,800.00 Manufacturing Margin $ 62,800.00 Less: Variable Sellign and administration expenses $ 15,700.00 Contribution margin $ 47,100.00 Fixed Cost Fixed Manufacturing Cost $ 16,700.00 Fixed Selling and adminsitration expenses $ 11,460.00 Total Fixed Cost $ 28,160.00 Income from Oparations $ 18,940.00