Question

The EG Company produces and sells one product. The following data refer to the year just completed:

Beginning inventory		0
Units produced		28,600
Units sold		27,300
Sales price per unit	$	495
Selling and administrative expenses:
Variable per unit	$	23
Fixed (total)	$	382,200
Manufacturing costs:
Direct materials cost per unit	$	279
Direct labor cost per unit	$	52
Variable manufacturing overhead cost per unit	$	36
Fixed manufacturing overhead	$	629,200

Assume that direct labor is a variable cost.

Required:

a.	Compute the cost of a single unit of product under both the absorption costing and variable costing approaches. (Omit the "$" sign in your response.)

	Cost per unit
Absorption costing	$
Variable costing	$

b.	Prepare an income statement for the year using absorption costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Absorption Costing Income Statement
(Click to select)  Sales  Cost of goods sold  Gross margin  Net operating income (loss)  Selling and administrative expenses	$
(Click to select)  Sales  Gross margin  Cost of goods sold  Net operating income (loss)  Selling and administrative expenses
(Click to select)  Cost of goods sold  Sales  Gross margin  Selling and administrative expenses  Net operating income (loss)
(Click to select)  Net operating income (loss)  Cost of goods sold  Gross margin  Sales  Selling and administrative expenses
(Click to select)  Selling and administrative expenses  Gross margin  Net operating income (loss)  Sales  Cost of goods sold	$

c.	Prepare a contribution format income statement for the year using variable costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Variable Costing Income Statement
(Click to select)  Variable selling and administrative expenses  Manufacturing overhead  Net operating income (loss)  Contribution margin  Selling and administrative expenses  Variable cost of goods sold  Sales		$
Variable expenses:
(Click to select)  Fixed selling and administrative expenses  Fixed manufacturing overhead  Contribution margin  Variable cost of goods sold  Sales  Variable selling and administrative expenses  Net operating income	$
(Click to select)  Fixed manufacturing overhead  Net operating income  Variable selling and administrative expenses  Fixed selling and administrative expenses  Variable cost of goods sold  Sales  Contribution margin
(Click to select)  Variable selling and administrative expenses  Net operating income (loss)  Sales  Contribution margin  Variable cost of goods sold  Manufacturing overhead  Selling and administrative expenses
Fixed expenses:
(Click to select)  Fixed selling and administrative expenses  Variable selling and administrative expenses  Net operating income  Variable cost of goods sold  Fixed manufacturing overhead  Sales  Contribution margin
(Click to select)  Fixed selling and administrative expenses  Fixed manufacturing overhead  Net operating income  Variable cost of goods sold  Variable selling and administrative expenses  Sales  Contribution margin
(Click to select)  Variable selling and administrative expenses  Sales  Variable cost of goods sold  Manufacturing overhead  Contribution margin  Selling and administrative expenses  Net operating income (loss)		$

d.	Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above. (Omit the "$" sign in your response.)

Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
Net operating income under variable costing	$
(Click to select)  Deduct  Add  :  (Click to select)  Fixed manufacturing overhead costs deferred in inventory under absorption costing  Fixed manufacturing overhead costs released from inventory under absorption costing
Net operating income under absorption costing

Answer 1