Question

In: Accounting

Denton Company manufactures and sells a single product. Cost data for the product are given: Variable...

Denton Company manufactures and sells a single product. Cost data for the product are given:

Variable costs per unit:
Direct materials $ 5
Direct labor 12
Variable manufacturing overhead 3
Variable selling and administrative 3
Total variable cost per unit $ 23
Fixed costs per month:
Fixed manufacturing overhead $ 135,000
Fixed selling and administrative 169,000
Total fixed cost per month $ 304,000

The product sells for $49 per unit. Production and sales data for July and August, the first two months of operations, follow:

Units
Produced
Units
Sold
July 27,000 23,000
August 27,000 31,000

The company’s Accounting Department has prepared the following absorption costing income statements for July and August:

July August
Sales $ 1,127,000 $ 1,519,000
Cost of goods sold 575,000 775,000
Gross margin 552,000 744,000
Selling and administrative expenses 238,000 262,000
Net operating income $ 314,000 $ 482,000

Required:

1. Determine the unit product cost under:

a. Absorption costing.

b. Variable costing.

2. Prepare contribution format variable costing income statements for July and August.

3. Reconcile the variable costing and absorption costing net operating incomes.

Solutions

Expert Solution

Note: Since the Format of Variable Costing Income statement and Reconciliation of Net income. I Prepared with Best Formate with all rows, Please use the Comment Box if any Difference in Formatte and Any further Clarity. thank You Very Much.


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