Question

Zola Company manufactures and sells one product. The following information pertains to the company’s first year of operations:

Variable cost per unit:
Direct materials	$	17
Fixed costs per year:
Direct labor	$	247,250
Fixed manufacturing overhead	$	280,000
Fixed selling and administrative expenses	$	82,500

The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Zola produced 21,500 units and sold 17,200 units. The selling price of the company’s product is $62.70 per unit.

Required:

1. Assume the company uses super-variable costing:

a. Compute the unit product cost for the year.

b. Prepare an income statement for the year.

1a

Compute the unit product cost for the year. Assume the company uses super-variable costing.

Unit product cost

1b

Prepare an income statement for the year. Assume the company uses super-variable costing.

Zola Company
Super-Variable Costing Income Statement
Fixed expenses:

Answer 1