Question

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.

Answer 1

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.