For Absorption Costing, I will calculate the Cost of Goods Sold by multiplying the Sales and...

For Absorption Costing, I will calculate the Cost of Goods Sold by multiplying the Sales and (Fixed Manufacturing cost per unit + Variable Manufacturing Cost per unit). The reconciliation should be done using this formula: Net Income (Absorption Costing) - Net Income (Variable Costing) = Fixed Overhead in ending balance - Fixed Overhead in opening balance. Thank you.

Medina Corp produces bicycle helmets. Each helmet is sold for $100. Planned and actual production was the same for May and June. The cost of the beginning inventory in May is the same as the cost of helmets in May. Data for the helmets for May and June follows:

		May		June
Sales		500	units	700	units
Production		700	units	560	units
Beginning inventory		60	units
Costs:
Variable Manufacturing		17500		14000
Fixed Manufacturing		14000		14000
Variable Operating		10000		12000
Fixed Operating		7000		7000


REQUIRED:

A. Prepare income statements for May and June under
	(i) variable costing; and,
	(ii) absorption costing.

B. Prepare a numerical reconciliation and explanation of the difference between operating income each month under absorption costing and variable costing.

500 is unit as there is a "unit" right behind 500, sale price is $100. I dont see any '76' and '60' in the question?

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Expert Solution

ekkarill92 answered 1 year ago

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