Question

Packer Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$	99
Units in beginning inventory		320
Units produced		2,190
Units sold		1,950
Units in ending inventory		560
Variable cost per unit:
Direct materials	$	19
Direct labor	$	22
Variable manufacturing overhead	$	2
Variable selling and administrative	$	12
Fixed costs:
Fixed manufacturing overhead	$	56,940
Fixed selling and administrative	$	5,850

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? (Omit the "$" sign in your response.)

	Cost per unit
Variable costing	$

b.	Prepare a contribution format income statement for the month 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)  Manufacturing overhead  Variable cost of goods sold  Selling and administrative expenses  Net operating income (loss)  Variable selling and administrative expenses  Sales  Contribution margin		$
Variable expenses:
(Click to select)  Net operating income  Variable selling and administrative expenses  Manufacturing overhead  Selling and administrative expenses  Contribution margin  Variable cost of goods sold  Sales	$
(Click to select)  Selling and administrative expenses  Manufacturing overhead  Sales  Variable cost of goods sold  Variable selling and administrative expenses  Net operating income  Contribution margin
(Click to select)  Sales  Selling and administrative expenses  Variable selling and administrative expenses  Variable cost of goods sold  Contribution margin  Net operating income (loss)  Manufacturing overhead
Fixed expenses:
(Click to select)  Contribution margin  Net operating income  Sales  Variable selling and administrative expenses  Fixed selling and administrative expenses  Variable cost of goods sold  Fixed manufacturing overhead
(Click to select)  Sales  Fixed manufacturing overhead  Variable cost of goods sold  Variable selling and administrative expenses  Contribution margin  Fixed selling and administrative expenses  Net operating income
(Click to select)  Selling and administrative expenses  Variable cost of goods sold  Variable selling and administrative expenses  Contribution margin  Net operating income (loss)  Manufacturing overhead  Sales		$

c.	Without preparing an income statement, determine the absorption costing net operating income for the month. (Omit the "$" sign in your response.)

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

Answer 1

Answer to Requirement a.

Variable Costing Unit Product Cost = Direct Materials + Direct Labor + Variable Manufacturing Overhead
Variable Costing Unit Product Cost = $19 + $22 + $2
Variable Costing Unit Product Cost = $43

Answer to Requirement b.

Answer to Requirement c.