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Tiny Tim's Bookcases variable full absorption costing

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Problem 2: Tiny Tim's Bookcases- Variable Costing vs Full Costing

The information for Tiny Tim's Bookcases for the first two years of its operations is as follows:

Selling price per unit \$600

Variable production costs per unit produced \$210

Variable selling costs per unit per unit sold \$12

Fixed production costs \$75,000

Fixed selling and administrative expenses \$46,000

Units sold each year 1,000 units

Annual production in units:
2010 1,000 units

2011 1,250 units

Part a: Compute the unit product cost under full (absorption) costing for 2010.
Part b: Compute the unit product cost under variable costing for 2010.

Part c: Prepare a variable costing income statement for 2010. No statement heading is required.

Part d: Prepare a full (absorption) costing income statement for 2010. No statement heading is required.
Part e: Compute the unit product cost under full (absorption) costing for 2011.
Part f: Compute the unit product cost under variable costing for 2011.

Solution Summary

Your tutorial is in Excel. I showed the unit cost for both years. I also created a traditional (gross profit subtotal) for both methods and a contribution margin format for both methods. This helps to show that you are just re-sorting the amounts and not changing the reported amounts. I created a second set of financial statements for 2011, even though you didn't ask, so you can see how they might be different when you don't sell all that you make.

Solution Preview

Your tutorial is in Excel. I showed the unit cost for both years. I also created a traditional (gross profit subtotal) for both methods and a contribution margin format for both methods. This helps to show ...

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