Netson Corporation, which has only one product, has provided the following data
ID: 2569289 • Letter: N
Question
Netson Corporation, which has only one product, has provided the following data concerning its most recent month of operations $122 Units produced Units sold Units in ending inventory 375 6,800 6,680 495 Variable costs per unit Direct materials Direct labor Variable manufacturing overhead S Variable selling and administrative 21 Fixed costs Fixed manufacturing overhead Fixed selling and administrative S 47 S 20 $ 115,600 S 86,840 the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to The company produces month Required a. Prepare a contribution format income statement for the month using variable costing Unit product cost under variable cos Direct materials Direct labor Variable costing unit product costExplanation / Answer
a.
Unit Product cost under variable costing
Direct materials
$ 47.00
Direct labor
$ 20.00
Variable manufacturing overhead
$ 2.00
Variable costing unit product cost
$ 69.00
Nelson Corporation
Variable costing income statement
Sales revenue ($122*6680)
$ 814,960.00
Variable expenses:
Variable cost of goods sold ($69*6680)
$ 460,920.00
Variable selling and administrative costs ($21*6800)
$ 142,800.00
$ 603,720.00
Contribution margin
$ 211,240.00
Fixed expenses
Fixed manufacturing overhead cost
$ 115,600.00
Fixed selling and administrative costs
$ 86,840.00
$ 202,440.00
Net income
$ 8,800.00
b.
Unit Product cost under absorption costing
Direct materials
$ 47.00
Direct labor
$ 20.00
Variable manufacturing overhead
$ 2.00
Fixed manufacturing overhead cost ($115,600/6800)
$ 17.00
Absorption costing unit product cost
$ 86.00
Nelson Corporation
Absorption costing income statement
Sales revenue ($122*6680)
$ 814,960.00
Less: Cost of goods sold ($86*6680)
$ 574,480.00
Gross profit
$ 240,480.00
Less: Selling and administrative costs ($21*6800)+$86,840
$ 229,640.00
Net income
$ 10,840.00
Unit Product cost under variable costing
Direct materials
$ 47.00
Direct labor
$ 20.00
Variable manufacturing overhead
$ 2.00
Variable costing unit product cost
$ 69.00