Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $4 Direct labor 10 Variable manufacturing overhead 3 Variab selling and administrative 2 Total variable cost per unit $ 19 Fixed costs per month: Fixed manufacturing overhead $ 90,000 Fixed selling and administrative 169,000 Total fixed cost per month $ 259,000 The product sells for $55 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 18,000 14,000 August 18,000 22,000 The company's Accounting Department prepared the following absorption costing income statements for July and August: July August Sales $ 770,000 $1,210,000 Cost of goods sold 308,000 484,000 Gross margin 462,000 726,000 Selling and administrative expenses 197,000 213,000 Net operating income $ 265,000 $ 513,000 Required: Determine the unit product cost under: Absorption costing. Variable costing. Prepare variable costing income statements for July and August. Reconcile the variable costing and absorption costing net operating incomes.

Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $4 Direct labor 10 Variable manufacturing overhead 3 Variab selling and administrative 2 Total variable cost per unit $ 19 Fixed costs per month: Fixed manufacturing overhead $ 90,000 Fixed selling and administrative 169,000 Total fixed cost per month $ 259,000 The product sells for $55 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 18,000 14,000 August 18,000 22,000 The company's Accounting Department prepared the following absorption costing income statements for July and August: July August Sales $ 770,000 $1,210,000 Cost of goods sold 308,000 484,000 Gross margin 462,000 726,000 Selling and administrative expenses 197,000 213,000 Net operating income $ 265,000 $ 513,000 Required: Determine the unit product cost under: Absorption costing. Variable costing. Prepare variable costing income statements for July and August. Reconcile the variable costing and absorption costing net operating incomes.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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