A corporation has provided the following information for the current year: Units

Question

A corporation has provided the following information for the current year:

Units produced 3,500 units

Sale price $200 per unit

Direct materials $70 per unit

Direct labor $55 per unit

Variable manufacturing overhead $20 per unit

Fixed manufacturing overhead $350,000 per year

Variable selling and administrative costs $30 per unit

Fixed selling and administrative costs $150,000 per year

Assuming 3,150 units are sold in the current year, determine net income (or loss) using absorption costing and variable costing.

Explanation / Answer

absorption costing sales revenue(3150*200) 630000 cost of sales Direct material (3500*70) 245000 Direct labour (3500*55) 192500 variable product overhead (20*3500) 70000 fixed product overhead 350000 gross profit -227500 Less: distribution & admin cost Variable selling and administrative costs(3150*30) 94500 Fixed selling and administrative costs    150000 net profit(loss) -472000 variable costing sales revenue(3150*200) 630000 cost of sales Direct material (3500*70) 245000 Direct labour (3500*55) 192500 variable product overhead (20*3500) 70000 Variable selling and administrative costs(3150*30) 94500 contribution 28000 Less; fixed cost fixed product overhead 350000 Fixed selling and administrative costs    150000 net profit -472000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

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