2. (40 points) Callahan Company, which has only one product, has provided the fo

Question

2. (40 points) Callahan Company, which has only one product, has provided the following data concerning its first month of operations: Selling price $100 Units produced Units sold 6,000 5,500 Variable product costs per unit Variable selling and administrative costs per unit $50 $10 Fixed manufacturing costs Fixed selling and administrative costs S90,000 $55,000 uired: What is the value of ending inventory using the variable costing method? What is the value of ending inventory using the absorption costing method? What is the contribution margin per unit? 9 5 30 ,0 ) a. 45 , 0, d Prepare a variable costing income statement for the month using variable costing (assume no taxes) e. What is the gross profit margin per unit? 15. f. Prepare an income statement for the month using absorption costing (assume no taxes) Varialole costina Income State WeAT Varble COGM 90,0 ending Inu,3 ess: Sales 6o vnur

Explanation / Answer

a) Value of ending inventory under variable costing method = 500*50 = 2500

b) Value of ending inventory under absorption costing method = (90000/6000)+50*500 =32500

c) Contribution margin per unit = 100-50-10 = 40 per unit

d) Variable costing income statement :

220000

e)Gross margin unit = 192500/5500 = 35 per unit

f) Absorption costing income statement :

Sales (5500*100) 550000 Less: Variable cost of goods sold (5500*50) (275000) Less: Variable selling and administrative exp (55000) Contribution margin

220000

Less: Fixed manufacturing overhead (90000) Less: Fixed selling and administrative expense (55000) Net operating income 75000

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.