II. Variable costing income statement Qu Company, which has only one product, ha
ID: 2567938 • Letter: I
Question
II. Variable costing income statement Qu Company, which has only one product, has provided the following data concerning its most recent month of operations: Units in beginning inventory.... Units produced. 4, 200 Variable costs per unit: Direct labor... Variable manufacturing overheated....$3 Variable selling and administrative....$11 Fixed costs: S30 Fixed selling and administrative ...$40,700 What is the unit product cost under variable costing? a. b. What is the net operating net income using variable costing? c. Without preparing an absorption income statement, determine the following relation for the most recent month: bsorption costing net incomeExplanation / Answer
a) Unit product cost under variable costing: Direct material cost $ 21.00 Direct labor cost $ 30.00 Variable manufacturing overhead $ 3.00 Unit product cost under variable costing $ 54.00 b) Net operating income using variable costing: Sales (3700*94) 347800 Less: Variable cost of goods sold (3700*54) 199800 Less: Variable selling and administrative expenses 40700 Contribution margin 107300 Less: Fixed costs: Manufacturing 54600 Selling and administration 40700 Net operating income 12000 c) Absorption costing income>variable costing net income. Reason: A portion of the fixed manufacturing costs would be deferred in the ending inventory, thereby increasing the net income under absorption costing. As there is no beginning inventory the previous period's fixed costs have not been carried over to the current period.