Moona Inc. produces Mobile phones. Information of the company's operations last year appear below:   Fixed cost:   Fixed Manufacturing overhead Rs 40,000 Fixed Selling & Administrative Rs    60,000     Selling Price per unit Rs100     Variable cost per unit:   Direct Materials Rs 30 Direct labor Rs 10 Variable Manufacturing overhead Rs5 Variable Selling & Administrative Rs2     Units In beginning Inventory 0 Units Produced 2000 Units sold 1900       Required: a. Compute the unit product cost under both absorption and variable costing. b. Prepare an income statement for the year using absorption costing. c. Prepare a contribution format income statement for the year using variable costing. d.Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Moona Inc. produces Mobile phones. Information of the company's operations last year appear below:

 

Fixed cost:

 

Fixed Manufacturing overhead

Rs 40,000

Fixed Selling & Administrative

Rs    60,000

 

 

Selling Price per unit

Rs100

 

 

Variable cost per unit:

 

Direct Materials

Rs 30

Direct labor

Rs 10

Variable Manufacturing overhead

Rs5

Variable Selling & Administrative

Rs2

 

 

Units In beginning Inventory

0

Units Produced

2000

Units sold

1900


 

 

 


Required:

a. Compute the unit product cost under both absorption and variable costing.
b. Prepare an income statement for the year using absorption costing.
c. Prepare a contribution format income statement for the year using variable costing.

d.Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year. 

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