Question

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

Selling price	$	195
Units in beginning inventory		0
Units produced		3,160
Units sold		2,870
Units in ending inventory		290
Variable costs per unit:
Direct materials	$	55
Direct labor	$	55
Variable manufacturing overhead	$	7
Variable selling and administrative expense	$	13
Fixed costs:
Fixed manufacturing overhead	$	113,760
Fixed selling and administrative	$	8,610

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 a contribution format income statement for the month using variable costing.

d. Prepare an income statement for the month using absorption costing.

e. Reconcile the variable costing and absorption costing net operating incomes for the month.

Answer 1