Question

A company produced 50,000 units during it first year of operation. It sold 47,300 units at $15.50 per unit.

Direct Materials $128,000

Direct Labor $93,000

Variable Overhead $65,000

Fixed Overhead $51,000

Variable Selling Expenses $1.10

Selling & Admin Costs $154,000

Prepare Absorption and Variable Costing Income Statements

Answer 1

	unit product cost
				absorption	variable
	Direct materials			2.56	2.56
	direct labor			1.86	1.86
	Variable overhead			1.3	1.3
	FOH	(51000/50000)		1.02
	unit product cost			6.74	5.72
	Absorption costing income statement
	sales	(47,300*15.50)			733150
	cost of goods sold		47300*6.74		318802
	Gross profit				414348
	selling expense
	variable	(47,300*1.1)		52030
	fixed			154,000	206,030
	Net income				208,318
	Variable costing income statement
	sales				733150
	Variable cost
	cost of goods sold		47300*5.72		270556
	selling expense				52,030
	contribution margin				410,564
	Fixed expense
	fixed overhead			51,000
	fixed selling expense			154,000	205,000
	net income				205,564