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	$	15
Fixed costs per year:
Direct labor	$	185,250
Fixed manufacturing overhead	$	240,000
Fixed selling and administrative expenses	$	72,500

The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Zola produced 19,500 units and sold 15,600 units. The selling price of the company’s product is $55.10 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.

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.