Lefelmann Corporation, which has only one product, has provided the following da

Question

Lefelmann Corporation, which has only one product, has provided the following data conceming its most recent month ofl operations Selling price ,100 1,300 Units in ending inventeey Variable costs per unit Direct materials 631 4 5 Variabie mansfeeturing overhead Pi sed manufacter Log overhead Piwed selling ad adsiniatracive xpense 94,300 47, 300 The company produces the same number of units every month, although the saes in units vary trom month to month. The company's variable costs per unit and lotal faxed costs have been constant from month to month a What is he ut product cost for the month under variable cosing? b. What is the unit product cost for the month under absorption costing? C Prepare a conrbution Sornat income statement for the month using variable cosing d. Piepare an income statement for the month using absoption costäng e. Reconcile the variable cosing and absorption costing net operating incomes for the month

Explanation / Answer

Compute the Variable costing Unit Product cost Year 1 Direct Material 31 Direct labour 59 Variable Manufacturing overheads 4 Variable costing unit prroduct cost 94 Construct The Absorption Costing Unit Product Cost Year 1 Direct Material 31 Direct labour 59 Variable Manufacturing overheads 4 Fixed Manufacturing overheads 23.00 (94300/4100) Absorption costing unit prroduct cost 117.00 Construct The Variable Costing Income Statement YEAR 1 Sales 593,400 Less: Variable cost    variable cost of goods sold 404,200    Variable selling expense 38,700 442,900 Contribution margin 150,500 Fixed expense:    Fixed Manufacturing overheads 94,300    Fixed selling expense 47,300 Net operating Income 8,900 The Absorption Costing Income Statement Year 1 Sales $593,400 Cost of Goods sold 503100 Gross Margin $90,300 Selling and distribution expense 86,000 Net operating income 4,300 Reconciliation Statement: Income under variable costing 8900 Less: Fixed OH released in beginning inventory(200units@23) -4600 Income under Absorption costing 4300

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