White Water Rafting Company manufactures kayaks, which sell for $595 each. The variable costs of production...

White Water Rafting Company manufactures kayaks, which sell for $595 each. The variable costs of production (per unit) are as follows:

Direct Material $ 210

Direct labor 125

Variable manufacturing overhead 85

Budgeted fixed overhead in 20x1 was $423,000

and budgeted production was 47,000 kayaks.

The year’s actual production was 47,000 units, of which 38,500 were sold.

Variable selling and administrative costs were $6 per unit sold; fixed selling and administrative costs were $67,000.

Required:

A. Calculate the product cost per kayak under (a) absorption costing and (b) variable costing.

B. Prepare operating income statements for the year using (a) absorption costing and (b) variable costing.

C. Reconcile reported operating income under the two methods using the shortcut method.

Expert Solution

ekkarill92 answered 2 years ago

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