Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Textbook Question
Chapter 6, Problem 6.17E
Compute product cost and prepare an income statement under variable and absorption costing.
(LO 5), AP
Siren Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2017, the company incurred the following costs.
| Variable Costs per Unit | |
| Direct materials | $7.50 |
| Direct labor | $3.45 |
| Variable manufacturing |
$3.80 |
| Variable selling and administrative expenses | $3.90 |
| Fixed Costs per Year | |
| Fixed manufacturing overhead | $225,000 |
| Fixed selling and administrative expenses | $210,100 |
Siren Company sells the fishing lures for $23. During 2017, the company sold 80,000 lures and produced 90,000 lures.
Instructions
(a) Assuming the company uses variable costing, calculate Sirens
(b) Prepare a variable costing income statement for 2017.
(c) Assuming the company uses absorption costing, calculate Sirens manufacturing cost per unit for 2017.
(d) Prepare an absorption costing income statement for 2017.
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Chapter 6 Solutions
Managerial Accounting: Tools for Business Decision Making
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