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Paint Moore LLC

Paint More LLC has organized a new division to manufacture and sell specialty paint. The division's monthly costs are shown below:

Manufacturing costs:
Variable costs per unit:
Direct materials $12
Variable manufacturing overhead $1
Fixed manufacturing overhead costs (total) $100,000
Selling and administrative costs:
Variable 7% of sales
Fixed (total) $31,000

Because the production is highly automated, the company includes its labor costs in its fixed manufacturing overhead. The gallons of paint sell for $68 each. During September, the first month of operations, the following activity was recorded:

Units produced 5,000
Units sold 4,000

Submit an Excel document which each tab labeled by item number in good form that demonstrates the following:
Compute the unit product cost under:
Absorption costing
Variable costing
Prepare an absorption costing income statement for September
Prepare a contribution format income statement for September using variable costing

Solution Preview

Dear student,
Solution is provided in a separate excel file attached under the following parts.

1 Data used in the problem

2 Statement of unit cost analysis under Variable and absorption costing.

3 Income statement under Absorption costing

4 Income statement (Contribution format) under Variable costing

5 Explanatory Notes: ...

Solution Summary

The new division to manufactures for costs are examned.