Question

Wyatt Corporation has just completed its first year of operations. Below are selected data:

Number of units produced 50,000 units    

Number of units sold   42,000 units   

Selling price per unit   $ 35.00   

Costs per unit:      

Direct materials   $ 3.00     

Direct labor    $ 5.00      

Variable overhead   $ 1.00      

Variable selling expenses $ 2.00   

Fixed expenses:       

Fixed overhead   $200,000      

Fixed selling expenses    $300,000

a.) Using the variable costing approach, calculate the operating income.

b.) Using the absorption costing approach, calculate the unit manufacturing cost?.

c.) Using the absorption costing approach, calculate the operating income?.

?

Answer 1

a
Sales		1470000
Variabe costs:
Variable cost of goods sold	378000
Variable selling expenses	84000	462000
Contribution margin		1008000
Fixed expenses:
Fixed overhead	200000
Fixed selling expenses	300000	500000
Operating income		508000
b
Direct materials	3
Direct labor	5
Variable overhead	1
Fixed overhead	4	=200000/50000
Unit manufacturing cost	13
c
Sales	1470000
Cost of goods sold	546000	=42000*13
Gross margin	924000
Selling expenses	384000
Operating income	540000