Please give me all answers. I just need answers, not explanation. If you can\'t
ID: 2570280 • Letter: P
Question
Please give me all answers. I just need answers, not explanation.
If you can't give me all answers, just ignore please. Some of you just leave 3 or 4 answers.. that's why I leave comment.
Denton Company manufactures and sells a single product. Cost date for the praduct are given: Direat 1abor 10 rative Variable aelling and Total variable coet per unit 53, 000 Fixed nanutacturing overhead Pixed selling and adninistrative163,00 etal fixed coat per acat 226,000 The product sells for $51 per unit. Production and sales data for July end August, the first two months of operations, follow: Units Units Praducud Sald Julg ugust 21,0D 25 000 The company's Accounting Department has prepared the fol lowing absorption costing income statements for July and August July $ B67, 000 Auguat 1,275. DCO cost of goode sold Selling and adninietrative expeneee 210 238-000 et operating incone 330 00 562,DC0 Required 1. Determine the unit product cost under e. Absorption costing. b. Variable costing 2. Prepare contribution format variable costing income statements for July and August 3. Reconcile the varinble costing and absorption costing net operating incomes. Required 1 Required 2 Required 3 Deterrmine the unit product cost under: (a) Absorption costing, (b) Variable costing. . Variable coeing Required 2> Roquired Roquired 2Roquired 3 Prepare contribution format variable costing income statements for July.and AUust Variable Costing Income Statement July August Net operating income(1088 Required 1 Requlred 3 Required1 Required 2 Required 3 Recancile the variabla casting and absarption costing net aperating incomes. (Entar any lsses or deductions as a negative valle) of Variabla Costing and Absorption Costing Nat Operating Income August vanable costing net operating income flo Add (ceduct) fixed manufecturing owerheed cost deferred in freleased from) inventory under absorpicn coetin Absorption costing nat a,perating income,la Required 2 Required3Explanation / Answer
Solution:
Part 1-a) --- Unit Product Cost under Absorption Costing
Absorption Costing Income Statement
- Under Absorption Costing, product cost includes both fixed and variable manufacturing expenses used to fabricate the product or service.
- It includes cost of direct material used, cost of direct labor, consumable supplies used and manufacturing/factory overheads (both variable as well as fixed factory overhead).
- Ending Inventory is valued on Production Cost.
- Product Cost does not include Selling, General and Administrative Expenses.
Unit Product Cost
Absorption Costing
Direct materials per unit
$4.00
Direct labor per unit
$10.00
Variable Manufacturing Overhead
$2.00
Applied Fixed Manufacturing Overhead per unit
(63000 / 21,000 Units)
$3.00
Unit Product Cost
$19.00
Part 1-b) – Unit Product Cost under Variable Costing System
Variable Costing Income Statement
Under Variable Costing System, product cost includes only following variable manufacturing costs:
- Cost of direct material used
- Direct labor cost
- Variable manufacturing overheads.
Under this system, fixed costs are not considered in product cost and for valuation of closing stock of finished goods. Fixed costs are treated as period cost in this system.
Fixed Costs are not considered in product cost and for valuation of closing stock of finished goods.
The value of finished goods and work in process is also comprised only of Manufacturing Variable Costs.
- Selling and administrative expenses are not included because these are not the expenses incurred in production department. These expenses relate to selling and admin department.
Unit Product Cost
Variable Costing
Direct materials per unit
$4.00
Direct labor per unit
$10.00
Variable Manufacturing Overhead
$2.00
Unit Product Cost
$16.00
Part 2 --- Variable Costing Income Statement
Variable Costing Income Statement
July
August
Sales Revenue (A)
$867,000
$1,275,000
Less: Variable Cost of Goods Sold
Production Cost (Unit Product Cost $16 x Produced Units)
$336,000
$336,000
Add: Beginning Inventory
$0
$64,000
Cost of Goods Available for Sale
$336,000
$400,000
Less: Ending Inventory (4,000 Units x $16)
($64,000)
0
Cost of Goods Sold
$272,000
$400,000
Variable Selling and administrative Expenses (Unit Sold x $3)
$51,000
$75,000
Total Variable Cost (B)
$323,000
$475,000
Contribution Margin (C=A-B)
$544,000
$800,000
Fixed Expenses:
Fixed Manufacturing Overhead Costs
$63,000
$63,000
Fixed Selling and administrative expenses
$163,000
$163,000
Total Fixed Expenses (D)
$226,000
$226,000
Net Operating Income (C-D)
$318,000
$574,000
Note—
Ending Inventory of July = Unit Produced in July – Unit Sold in July = 21,000 Units – 17,000 Units = 4,000 Units
Unit Product Cost = $16 per unit
Value of Ending Inventory of July = 4,000 Units x $16 = $64,000
Part 3 – Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
July
August
Net Operating Income as per Variable Costing
$318,000
$574,000
Add or (Deduct) the Fixed Manufacturing Overhead cost deferred or released from the Inventory (Since variable cost does not include fixed manufacturing cost in product cost but the absorption costing includes)
Ending Inventory of July and Beginning Inventory of August (4,000 Units x $3 Fixed Overhead Per Unit)
$12,000
-$12,000
Net Operating Income as per Absorption Costing
$330,000
$562,000
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Unit Product Cost
Absorption Costing
Direct materials per unit
$4.00
Direct labor per unit
$10.00
Variable Manufacturing Overhead
$2.00
Applied Fixed Manufacturing Overhead per unit
(63000 / 21,000 Units)
$3.00
Unit Product Cost
$19.00