Coca Cola Company gathered the following information regarding its only product:
Direct materials used $9,000
Direct labor 17,000
Variable factory overhead 13,000
Fixed factory overhead 8,000
Variable selling and administrative expenses 22,000
Fixed selling and administrative expenses 11,000
Units produced and sold 10,000
Selling price per unit $20
a. Compute the unit manufacturing cost of the product under the absorption approach.
b. Compute the unit manufacturing cost of the product under the contribution approach.
c. Compute the effect on net income of accepting a special order for 500 units at $10 per unit assuming excess capacity.
The solution shows how to calculate the specified costs for Coca Cola, using the absorption method, the contribution approach, and assuming excess capacity.