In: Accounting
please answer D and E completely
Lee Company, which has only one product, has provided the
following data concerning its most recent month of
operations:
Selling price |
$95 |
Units in beginning inventory |
100 |
Units produced |
6,200 |
Units sold |
5,900 |
Units in ending inventory |
400 |
Variable costs per unit: |
|
Direct materials |
$42 |
Direct labour |
$28 |
Variable manufacturing overhead |
$1 |
Variable selling and administrative |
$5 |
Fixed costs: |
|
Fixed manufacturing overhead |
$62,000 |
Fixed selling and administrative |
$35,400 |
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) 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 operating
incomes for the month.