Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customer's ear. Cost data for the product follow: Variable costs per unit: Direct materials Direct labour Variable factory overhead Variable selling and administrative Total variable costs per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month May June The product sells for $60 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Units Produced Units Sold 17,000 29,000 23,000 23,000 Sales Cost of goods sold: 13 12 9 5 39 Income statements prepared by the Accounting Department using absorption costing are presented below: May June $1,020,000 $1,740,000 Beginning inventory Add cost of goods manufactured Goods available for sale Less ending inventory $276,000 161,000 $437,000 Cost of goods sold Gross margin Selling and administrative expenses Operating income 0 276,000 1,058,000 1,334,000 1,058,000 1,058,000 276,000 782,000 238,000 246,000 $ (8,000) $ 0 1,334,000 406,000 306,000 100,000

Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customer's ear. Cost data for the product follow: Variable costs per unit: Direct materials Direct labour Variable factory overhead Variable selling and administrative Total variable costs per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month May June The product sells for $60 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Units Produced Units Sold 17,000 29,000 23,000 23,000 Sales Cost of goods sold: 13 12 9 5 39 Income statements prepared by the Accounting Department using absorption costing are presented below: May June $1,020,000 $1,740,000 Beginning inventory Add cost of goods manufactured Goods available for sale Less ending inventory $276,000 161,000 $437,000 Cost of goods sold Gross margin Selling and administrative expenses Operating income 0 276,000 1,058,000 1,334,000 1,058,000 1,058,000 276,000 782,000 238,000 246,000 $ (8,000) $ 0 1,334,000 406,000 306,000 100,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 1PB: The following product costs are available for Stellis Company on the production of erasers: direct...

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