Explore BrainMass

Explore BrainMass

    Absorption vs.Variable Costing for the Bohne Company

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    9. The Bohne Company produces chocolate candies. The chocolates sell for $12 per box. Annually, the company produces 10,000 boxes of chocolates and sells 9,000 boxes of the candies. The company's cost information includes the following:

    Direct materials $2.00 per unit
    Direct labor $3.00 per unit
    Fixed manufacturing overhead $20,000
    Fixed selling and administrative expenses $5,000
    Variable manufacturing overhead $1.00 per unit
    Variable selling and administrative expenses $3.00 per unit

    (a) Compute the unit product cost under absorption costing.

    (b) Compute the unit product cost under variable costing.

    (c) Prepare an income statement using absorption costing.

    (d) Prepare an income statement using variable costing.

    (e) Explain the difference of $2,000 in the net operating income determined under the absorption and variable costing methods.

    © BrainMass Inc. brainmass.com June 3, 2020, 8:56 pm ad1c9bdddf
    https://brainmass.com/business/accounting/absorption-vs-variable-costing-for-the-bohne-company-159032

    Attachments

    Solution Summary

    This solution includes an Excel file containing calculation of unit cost and income statement using absorption and variable costing and explains the difference of $2,000 in the net operating income determined under the absorption and variable costing methods.

    $2.19

    ADVERTISEMENT