FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Denton Company manufactures and sells a single product. Cost data for the product are given:
Variable costs per unit:
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Total variable cost per unit
Fixed costs per month:
Fixed manufacturing overhead
Fixed selling and administrative
Total fixed cost per month
The product sells for $45 per unit. Production and sales data for July and August, the first two months of operations, follow:
July
August
Units
Produced
21,000
21,000
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
$3
10
4
2
$ 19
Required:
1. Determine the unit product cost under:
a. Absorption costing.
b. Variable costing.
$ 84,000
166,000
$ 250,000
Units Sold
17,000
25,000
The company's Accounting Department prepared the following absorption costing income statements for July and August:
July
August
$765,000 $1,125,000
357,000
408,000
200,000
$ 200,000
525,000
600,000
215,000
$ 384,000
2. Prepare variable costing income statements for July and August.
3. Reconcile the variable costing and absorption costing net operating incomes.
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Transcribed Image Text:Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month The product sells for $45 per unit. Production and sales data for July and August, the first two months of operations, follow: July August Units Produced 21,000 21,000 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income $3 10 4 2 $ 19 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. $ 84,000 166,000 $ 250,000 Units Sold 17,000 25,000 The company's Accounting Department prepared the following absorption costing income statements for July and August: July August $765,000 $1,125,000 357,000 408,000 200,000 $ 200,000 525,000 600,000 215,000 $ 384,000 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes. Complete this question by entering your answers in the tabs below. Check my
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