Question

Bartelt Inc., which produces a single product, the unit production costs have not changed over time. It provided the following data for its most recent month of operations: .Selling price per unit $200 Number of units produced 8,000 Variable costs per unit: Variable production costs (DM+DL+VOH) $150 Variable selling and administrative expense $10 Fixed costs: Fixed manufacturing overhead $60,000 Fixed selling and administrative expense $40,000 19. There was no beginning inventory. The absorption costing unit product cost was: A. $117.50 per unit 3. $150.00 per unit C. $157.50 per unit D. $183.00 per unit 20. The variable costing unit product costs for Bartelt Inc. above was: A. $117.50 per unit B. $150.00 per unit c. $157.50 per unit D. $183.00 per unit 21. The net operating income for the month under variable costing approach for Bartelt Inc. above was: A. 200,000 B. 213,750 c. 249,600 D. 254,600 22. The net operating income for the month under absorption costing for Bartelt Inc. above was: A. The same as the amount reported under the variable costing approach. B. $3,750 more than the amount reported under variable costing approach. C. $3,750 less than the amount reported under variable costing, D. Cannot be determined by the information provided.

Answer 1

	1)	unit product cost under Absorption Costing
		variable production cost					150
		fixed manufacturing overhead (60000/8000)					7.5
		unit product cost under Absorption Costing					157.5
		option c)	$157.50
	2)	variable costing unit product cost $150
		option B)	$150
	3)	net operating income under variable costing
		contribution = selling price - unit product cost -variable selling expense
			200-150 - 10
			40
		total contribution margin (7500*40)=					300000
		less:Fixed expense
			fixed manufacturing overhead			60,000
			Fixed selling & adm expense			40,000	100,000
			net operating income				200,000
		option A)	$200,000
		(since you have not mentioned the units sold or ending inventories
		on hand I have assumed that is sold 7500 units)
	4)	option b)
		$3750 more than the amount reported under variable costing
		approach
		since fixed overhead will be deferred in ending inventory so
		income under absorption costing will be more