Question

Question 2

Superman Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	RM140
Units in beginning inventory	500
Units produced	12,000
Units sold	11,800
Variable costs per unit:
Direct materials	RM35
Direct labor	RM22
Variable manufacturing overhead	RM18
Variable selling and administrative	RM15
Fixed costs:
Fixed manufacturing overhead	RM80,000
Fixed selling and administrative	RM175,000

The company produces the same number of units every month, although the sales in units vary from month to month. The company’s variable costs per unit and total fixed costs have been constant from month to month.

Required:

(a) Calculate the cost of one unit of product under absorption costing.

(b) Calculate the cost of one unit of product under variable costing.

(c) Calculate Superman’s next year operating income under absorption costing.

(d) Calculate Superman’s next year operating income under variable costing.

Answer 1