Abbitt Company, which has only one product, has provided the following data concerning its most recent month of operations:
19. What is the unit product cost for the month under variable costing?
20. What is the unit product cost for the month under absorption costing?
21. The total contribution margin for the month under the variable costing approach is:
22. The total gross margin for the month under the absorption costing approach is:
23. What is the net operating income for the month under variable costing?
24. What is the net operating income for the month under absorption costing?
Solution contains calculations of contribution margin ,cost per unit and net operating income under absorption costing and variable costing.
Managerial Accounting (Absorption Costing & Variable Costing)
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year appears below:
Please see the attachment for better layout.
Sales (39,000 units Ã? $44.6 per unit) $1,739,400
Cost of goods sold (39,000 units Ã? $21 per unit)
Gross margin 920,400
Selling and administrative expenses
Net operating income
The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $21 per unit product cost given above is computed as follows:
Direct materials $9
Direct labor 3
Variable manufacturing overhead 3
Fixed manufacturing overhead ($306,000 ÷ 51,000 units)
Absorption costing unit product cost
Redo the company's income statement in the contribution format using variable costing. (Input all amounts as positive values.
Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.View Full Posting Details