Packer Company, which has only one product, has provided the following data conc
ID: 2466595 • Letter: P
Question
Packer Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 83 Units in beginning inventory 525 Units produced 2,220 Units sold 2,370 Units in ending inventory 375 Variable costs per unit: Direct materials $ 21 Direct labor $ 18 Variable manufacturing overhead $ 1 Variable selling and administrative $ 12 Fixed costs: Fixed manufacturing overhead $ 51,060 Fixed selling and administrative $ 7,110
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. (Hint: Use the reconciliation method.)
What is the unit product cost for the month under variable costing?
Prepare a contribution format income statement for the month using variable costing.
Without preparing an income statement, determine the absorption costing net operating income for the month.
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. (Hint: Use the reconciliation method.)
Explanation / Answer
a)Unit product cost under variable costing =DM +DL +vOH
= 21+18+ 1= 40
Unit cost under absorption costing = 40 + (51060 / 2220)
= 40 + 23 = 63
b)
Net operating income
c)
Sales (83*2370) 196710) Less:variable cost of sales (40*2370) - 94800 Variable selling and administration expense (12 *2370) - 28440 contribution margin 73470 less:Fixed manufacturing cost -51060 Fixed selling -7110Net operating income
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