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Great Outdoze Company manufactures sleeping bags, which sell for $66.60 each. The variable costs of production...

Great Outdoze Company manufactures sleeping bags, which sell for $66.60 each. The variable costs of production are as follows:

Direct material $ 18.30
Direct labor 11.00
Variable manufacturing overhead 7.40


Budgeted fixed overhead in 20x1 was $163,800 and budgeted production was 26,000 sleeping bags. The year’s actual production was 26,000 units, of which 24,000 were sold. Variable selling and administrative costs were $1.90 per unit sold; fixed selling and administrative costs were $29,000.

Required:
1. Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing.
2-a. Prepare an operating income statement for the year using absorption costing.
2-b. Prepare an operating income statement for the year using variable costing.
3. Reconcile reported operating income under the two methods using the shortcut method

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ekkarill92 answered 2 years ago
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