In: Accounting
Madison Company, which has only one product, has provided the
following data concerning its most recent month of
operations:
Selling price |
$166 |
Units in beginning inventory |
600 |
Units produced |
13,200 |
Units sold |
13,350 |
Variable costs per unit: |
|
Direct materials |
$51 |
Direct labour |
$56 |
Variable manufacturing overhead |
$5 |
Variable selling and administrative |
$13 |
Fixed costs: |
|
Fixed manufacturing overhead |
$92,400 |
Fixed selling and administrative |
$253,650 |
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. Compute the total Contribution Margin.
b. Compute the Operating Income under Variable Costing.
c. Prepare a reconciliation from your Variable Costing Operating
Income to compute Operating Income under absorption costing.