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: Selling price $ 122 Units in beginning inventory Units produced Units sold Units in ending inventory 290 6,600 6,590 300 Variable cost per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative21 Fixed costs Fixed manufacturing overhead Fixed seling and administrative $ 42 $ 26 $151,800 $ 46,130 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 Required: a. Prepare a contrbution format income statement for the month using variable costing (Input all emounts as positive values except losses which should be indicated by a minus sign. Omit the s" sign in your response) Variable Costing Income Statement Variable expenses (Click to select) (Click to select) Click to select Fixed expenses (Click to select) (Click to select (Click to seiect) b. Prepare an income statement for the month using absorption costing. (input all amounts as p values except losses which should be indicated by a minus sign. Leave no cells blank be osltive certain to enter "O" wherever required. Omit the "$" sign in your response.) Absorption Costing Income S Statement Click to select) Click to select) (Click to selecdt) (Click to select) (Click to selec) Type here to search

Explanation / Answer

a. 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.) Unit product cost under variable costing: Direct materials $42.00 Direct labor $26.00 Variable manufacturing overhead $2.00 Variable costing unit product cost $70.00 Variable Costing Income Statement Sales = $122 x 6590 $803,980.00 Variable expenses: Variable cost of goods sold = $70 x 6590 $461,300.00 Variable selling and administrative expenses $21 x 6590 $138,390.00 $599,690.00 Contribution margin $204,290.00 Fixed Expenses: Fixed manufacturing overhead $151,800.00 Fixed selling and administrative $46,130.00 $197,930.00 Net operating income $6,360.00 b. Prepare an income statement for the month using absorption costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Unit product cost under absorption costing: Direct materials $42.00 Direct labor $26.00 Variable manufacturing overhead $2.00 Fixed manufacturing overhead cost = $151800/6600 $23.00 Absorption costing unit product cost $93.00 Absorption Costing Income Statement Sales = $122 x 6590 $803,980.00 Cost of goods sold $612,870.00 Gross margin $191,110.00 Selling and administrative expenses = $46130 + $21 x 6590 $184,520.00 Net operating income $6,590.00

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