Nesman Company, which has only one product, has provided the following data conc

Question

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

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Prepare a contribution format income statement for the month using variable costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Prepare an income statement for the month using absorption costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

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

Explanation / Answer

Answer a. Income Statement As per Variable Costing Units Sold              6,070 SP Per Unit                  115 Sales in $          698,050 Less: Variable Expenses Direct Material ($46 X 6070)          279,220 Direct Labor ($27 X 6070)          163,890 Variable MOH ($3 X 6070)            18,210 Variable Selling & Admn. Exp. ($12 X 6070)            72,840          534,160 Contribution          163,890 Less: Fixed Costs Fixed Manufacturing Cost          112,100 Fixed selling & Admn. Exp.            36,420          148,520 Net Income            15,370 Answer b. Calculation Cost Per Unit Under Absorption Costing Direct Materials 46 Direct Labor 27 variable MOH 3 Fixed MOH ($112100 / 5900 Units) 19 Total Cost per Unit 95 Income Statement Under Absorption Costing Units Sold              6,070 SP Per Unit                  115 Sales in $          698,050 Less: Cost of Goods Sold Opening Inventory - 380 Units X $95            36,100 Add: Produced during the Month - 5900 X $95          560,500 Less: Closing Inventory - 210 X $95          (19,950)          576,650          121,400 Less: Selling & Admn. Exp. Variable ($12*6070 Units)            72,840 Fixed            36,420          109,260 Net Income            12,140 Note: Selling and administrative expenses (both variable and fixed) are not relevant for the computation of unit product cost.

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