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    Absorption and Variable Costing

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    Maher Company, which has only one product, has provided the following data concerning its most recent month of operations:

    Selling price $129

    Units in beginning inventory 0
    Units produced 3,700
    Units sold 3,600
    Units in ending inventory 100

    Variable costs per unit:
    Direct materials $37
    Direct labor 38
    Variable manufacturing overhead 6
    Variable selling and administrative 5

    Fixed costs:
    Fixed manufacturing overhead $103,600
    Fixed selling and administrative 50,400

    Required:

    a. What is the unit product cost for the month under variable costing?
    b. What is the unit product cost for the month under absorption costing?
    c. Prepare an income statement for the month using the contribution format and the variable costing method.
    d. Prepare an income statement for the month using the absorption costing method.
    e. Reconcile the variable costing and absorption costing net operating incomes for the month.

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    https://brainmass.com/economics/labour-economics/94180

    Solution Summary

    The solution explains the calculations under absorption and variable costing methods

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