Question

            Lee Company, which has only one product, has provided the following    

           data for February 2020:

Selling price	$200
Planned production	8,000 units
Units in beginning inventory	100
Cost of beginning inventory	Full cost $85 including variable cost $68 and fixed cost of $17 per unit.
Units produced	7,000
Units sold	6,500
Direct materials per unit	$42
Direct labor per unit	$28
Variable overhead per unit	$2
Variable selling per unit	$5
Fixed manufacturing cost	$160,000
Fixed selling cost	$325,000

Required:

a) What is the unit product cost for the month under variable costing?

b) What is the unit product cost for the month under absorption costing?

c) Prepare an income statement for the month using the contribution format and the

     variable costing method.

d) Prepare an income statement for the month using the absorption costing method.

e) Reconcile the variable costing and absorption costing net incomes for the month.

Answer 1