Business, 03.06.2020 00:59, chycooper101
Denton Company manufactures and sells a single product. Cost data for the product are given below:
Variable costs per unit:
Direct materials $5
Direct labor 11
Variable manufacturing overhead 3
Variable selling and administrative 1
Total variable cost per unit $20
Fixed costs per month:
Fixed manufacturing overhead $120,000
Fixed selling and administrative 169,000
Total fixed cost per month $289,000
The product sells for $52 per unit. Production and sales data for July and August, the first two months of operations, are as follows:
Units Produced Units Sold
July 27,000 23,000
August 27,000 31,000
The companyâs Accounting Department has prepared absorption costing income statements for July and August as presented below:
July August
Sales $1,196,000 $1,612,000
Cost of goods sold 483,000 651,000
Gross margin 713,000 961,000
Selling and administrative expenses 241,000 265,000
Net operating income $472,000 $696,000
Required:
1. Determine the unit product cost under absorption costing and variable costing.
2. Prepare contribution format variable costing income statements for July and August.
3. Reconcile the variable costing and absorption costing net operating income.
Answers: 3
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Denton Company manufactures and sells a single product. Cost data for the product are given below: <...
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