Question

answer this question completely do steps 2 &4

Dance Creations manufactures authentic Hawaiian hula skirts that are purchased for traditional Hawaiian celebrations, costume parties, and other functions. During its first year of business, the company incurred the following costs:

Variable Cost per Hula Skirt
Direct materials	$	9.60
Direct labor		3.40
Variable manufacturing overhead		1.05
Variable selling and administrative expenses		0.40
Fixed Cost per Month
Fixed manufacturing overhead	$	16,125
Fixed selling and administrative expenses		4,950

Dance Creations charges $30 for each skirt that it sells. During the first month of operation, it made 1,500 skirts and sold 1,375.

2-Complete a variable costing income statement for last month. (Round your answers to 2 decimal places.)

4-Complete a full absorption costing income statement. (Round your intermediate calculations and the final answers to 2 decimal places.)

use only these word choices in the columns

• Beginning Inventory
• Cost of Goods Sold
• Ending Inventory
• Fixed Costs
• Fixed General and Administrative Expense
• Fixed Manufacturing Overhead
• Interest Expense
• Net Income After Taxes
• Sales Revenue
• Selling and Administrative Expenses
• Variable Costs
• Variable Selling Expenses

Answer 1

Ans. 2	DANCE CREATIONS
	Variable Costing Income Statement
	PARTICULARS		Amount
	Sales   (1,375 * $30)		$41,250.00
	Less: Variable cost of goods sold:
	Opening inventory	$0.00
	Add: Variable cost of goods manufactured (1,500 * $14.05)	$21,075.00
	Variable cost of goods available for sale	$21,075.00
	Less: Ending inventory [(1,500 - 1,375) * $14.05]	-$1,756.25
	Variable cost of goods sold		$19,318.75
	Gross Contribution Margin		$21,931.25
	Less: Variable Selling and Administrative Expenses (1,375 * $0.40)		$550.00
	Contribution Margin		$21,381.25
	Less: Fixed expenses:
	Fixed manufacturing overhead	$16,125.00
	Fixed selling and administrative expenses	$4,950.00	$21,075.00
	Net operating income		$306.25
	*Variable cost of goods manufactured = Units produced * Variable unit product cost
	In variable costing method, the unit product cost is the sum of only variable
	manufacturing costs per unit
	Unit product cost under Variable Costing:
	Direct materials	$9.60
	Direct labor	$3.40
	Variable Overhead per unit	$1.05
	Total production cost per unit	$14.05
Ans. 4	DANCE CREATIONS
	Full Absorption Costing Income Statement
	PARTICULARS		Amount
	Sales   (1,375 * $30)		$41,250.00
	Less: Cost of goods sold
	Opening inventory	$0.00
	Add: Cost of goods manufactured (1,500 * $24.80)	$37,200.00
	Cost of goods available for sale	$37,200.00
	Less: Ending inventory [(1,500 - 1,375) * $24.80]	-$3,100.00
	Cost of goods sold (total)		$34,100.00
	Gross margin		$7,150.00
	Selling & Administrative expenses:
	Fixed	$4,950.00
	Variable     (1,375 * $0.40)	$550.00
	Total Selling and administrative expenses		$5,500.00
	Net operating income		$1,650.00
	*Ending inventory   = (Units produced - Units sold) * Production cost per unit
	In Absorption costing method, the unit product cost is the sum of all manufacturing costs per unit
	whether it is fixed or variable.
	Unit product cost under Absorption Costing:
	Direct materials	$9.60
	Direct labor	$3.40
	Variable Overhead per unit	$1.05
	Fixed overhead per unit   ($16,125 / 1,500)	$10.75
	Product Cost per unit	$24.80
	*Fixed overhead per unit = Fixed overhead / Units produced