Question

In: Accounting

2. Below is operating information of Weber Light Aircraft, a company that produces light recreational aircraft....

2. Below is operating information of Weber Light Aircraft, a company that produces light recreational aircraft.

Per Aircraft

Per Month

Selling price

$100,000

Direct materials

$19,000

Direct labor

$5,000

Variable manufacturing overhead

$1,000

Fixed manufacturing overhead

$70,000

Variable selling and administrative expense

$10,000

Fixed selling and administrative expense

$20,000

January

February

March

Beginning inventory

0

1

0

Units produced

2

2

5

Units sold

1

3

5

Ending inventory

1

0

0

a. Compute the unit product cost using variable costing method.

b. Prepare an income statement for January, February and March using variable costing method.

c. Compute the unit product cost using absorption costing method.

d. Prepare an income statement for January, February and March using absorption costing method

e. Explain why both variable and absorption costing generate same income in a particular month, whereas in another month they generate different incomes.

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Expert Solution

ekkarill92 answered 6 months ago
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