Share
Explore BrainMass

Bittman Company produces picture frames. During its first ye

Bittman Company produces picture frames. During its first year of operations, the company produced 10,000 frames and sold 9,000 frames at $12 per frame. The company's cost information includes the following:
Direct materials $2.00 per frame
Direct labor $3.00 per frame
Variable manufacturing overhead $1.00 per frame
Variable selling and administrative expenses $3.00 per frame
Fixed manufacturing overhead $20,000 per year
Fixed selling and administrative expenses $5,000 per year
Compute the unit product cost under absorption costing.
Compute the unit product cost under variable costing.
Compute the net income using absorption costing.
Compute the net income using variable costing.
Explain the difference in the net income determined under the absorption and variable costing methods.

Attachments

Solution Summary

Bittman Company produces picture frames. During its first year of operations, the company produced 10,000 frames and sold 9,000 frames at $12 per frame. The company's cost information includes the following:
Direct materials $2.00 per frame
Direct labor $3.00 per frame
Variable manufacturing overhead $1.00 per frame
Variable selling and administrative expenses $3.00 per frame
Fixed manufacturing overhead $20,000 per year
Fixed selling and administrative expenses $5,000 per year
Compute the unit product cost under absorption costing.
Compute the unit product cost under variable costing.
Compute the net income using absorption costing.
Compute the net income using variable costing.
Explain the difference in the net income determined under the absorption and variable costing methods.

$2.19