The product sells for $53 per unit. Production and sales data for July and Augus

Question

  

  

The product sells for $53 per unit. Production and sales data for July and August, the first two months of operations, are as follows:

  

  

The company’s Accounting Department has prepared absorption costing income statements for
July and August as presented below:

  

  

     

Prepare contribution format variable costing income statements for July and August.

     

Reconcile the variable costing and absorption costing net operating income.

Question 21: Denton Company manufactures and sells a single product. Cost data for the product are given below:

Explanation / Answer

1. Determine the unit product cost under:

2. Prepare contribution format variable costing income statements for July and August.

3. Reconcile the variable costing and absorption costing net operating incomes.

Absorption costing Variable costing Direct materials 5 5 Direct labor 11 11 Variable manufacturing overhead 3 3 Fixed manufacturing overhead 3 Unit product cost 22 19

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