Question

# The Atalia Corp. sells bicycle helmets for \$56 each. The variable manufacturing costs per unit total...

The Atalia Corp. sells bicycle helmets for \$56 each. The variable manufacturing costs per unit total \$20 per unit (direct material, direct labor and manufacturing overhead). The total fixed manufacturing overhead is \$15,000. For selling and administrative costs, variable S&A is \$1 per unit and fixed S&A is \$25,000. Atalia produced 5,000 units and sold 4,000 units.

The absorption costing NOI is _________, and the variable costing NOI is _________

Income Statement

Absorption Costing

 Sales(\$56*4000 units) \$224,000 Less: Cost of Good Sold (\$23#1*4000 units) \$92,000 Gross Profit \$132,000 Less:Variable selling & Adm. Expenses (\$1*4000 units) \$4000 Less:Fixed selling & Adm.Expenses \$25,000 Net Operating Income (NOI) \$103,000

#1 Product Cost per unit= Variable Manufacturing Cost per unit + Fixed manufacturing overhead per unit

= \$20 + (\$15,000/5000 units)

=\$20 + \$3

=\$23

Income statement

Variable Costing Income Statement

 Sales(\$56 * 4000) \$224,000 Less: Variable Cost of Good Sold (\$21#2 * 4000 units ) \$84,000 Contribution margin \$140,000 Less:Fixed Manufacturing overhead \$15000 Less:Fixed Selling & Adm. Expenses \$25,000 Net Operating Income (NOI) \$100,000

#2Total Variable Cost Per unit= Variable Manufacturing Cost per unit + Variable Sell.&Adm.Expenses

=\$20+\$1

=\$21

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