Question

Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August:

Sales (16,500 units)				$2,145,000
Production costs (21,000 units):
Direct materials		$1,010,100
Direct labor		485,100
Variable factory overhead		241,500
Fixed factory overhead		161,700		1,898,400
Selling and administrative expenses:
Variable selling and administrative expenses		$294,300
Fixed selling and administrative expenses		113,900		408,200

If required, round interim per-unit calculations to the nearest cent.

a. Prepare an income statement according to the absorption costing concept.

Answer 1