Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 9 Variable manufacturing overhead 4 Variable selling and administrative 2 Total variable cost per unit $ 19 Fixed costs per month: Fixed manufacturing overhead $ 72,000 Fixed selling and administrative 169,000 Total fixed cost per month $ 241,000 The product sells for $47 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 18,000 14,000 August 18,000 22,000 The company’s Accounting Department prepared the following absorption costing income statements for July and August: July August Sales $ 658,000 $ 1,034,000 Cost of goods sold 294,000 462,000 Gross margin 364,000 572,000 Selling and administrative expenses 197,000 213,000 Net operating income $ 167,000 $ 359,000 Required: Determine the unit product cost under: Absorption costing. Variable costing. Prepare variable costing income statements for July and August. Reconcile the variable costing and absorption costing net operating incomes.
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 9 Variable manufacturing overhead 4 Variable selling and administrative 2 Total variable cost per unit $ 19 Fixed costs per month: Fixed manufacturing overhead $ 72,000 Fixed selling and administrative 169,000 Total fixed cost per month $ 241,000 The product sells for $47 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 18,000 14,000 August 18,000 22,000 The company’s Accounting Department prepared the following absorption costing income statements for July and August: July August Sales $ 658,000 $ 1,034,000 Cost of goods sold 294,000 462,000 Gross margin 364,000 572,000 Selling and administrative expenses 197,000 213,000 Net operating income $ 167,000 $ 359,000 Required: Determine the unit product cost under: Absorption costing. Variable costing. Prepare variable costing income statements for July and August. Reconcile the variable costing and absorption costing net operating incomes.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 4P: Using the data in P4-2 and Microsoft Excel: 1. Separate the variable and fixed elements. 2....
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Question
Denton Company manufactures and sells a single product. Cost data for the product are given:
| Variable costs per unit: | |
| Direct materials | $ 4 |
|---|---|
| Direct labor | 9 |
| Variable manufacturing |
4 |
| Variable selling and administrative | 2 |
| Total variable cost per unit | $ 19 |
| Fixed costs per month: | |
| Fixed manufacturing overhead | $ 72,000 |
| Fixed selling and administrative | 169,000 |
| Total fixed cost per month | $ 241,000 |
The product sells for $47 per unit. Production and sales data for July and August, the first two months of operations, follow:
| Units Produced | Units Sold | |
|---|---|---|
| July | 18,000 | 14,000 |
| August | 18,000 | 22,000 |
The company’s Accounting Department prepared the following absorption costing income statements for July and August:
| July | August | |
|---|---|---|
| Sales | $ 658,000 | $ 1,034,000 |
| Cost of goods sold | 294,000 | 462,000 |
| Gross margin | 364,000 | 572,000 |
| Selling and administrative expenses | 197,000 | 213,000 |
| Net operating income | $ 167,000 | $ 359,000 |
Required:
- Determine the unit product cost under:
- Absorption costing.
- Variable costing.
- Prepare variable costing income statements for July and August.
- Reconcile the variable costing and absorption costing net operating incomes.
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required 1 Required 2
a. Absorption costing
b. Variable costing
Required 3
Determine the unit product cost under: (a) Absorption costing, (b) Variable costing
$
$
X Answer is not complete.
Unit
Product
Cost
21
19
Transcribed Image Text:Required 1 Required 2 Required 3
Prepare variable costing income statements for July and August.
Sales
Variable expenses:
Denton Company
Variable Costing Income Statement
Variable cost of goods sold
Variable selling and administrative expenses
Total variable expenses
Contribution margin
Fixed expenses:
Fixed manufacturing overhead
Fixed selling and administrative expenses
Net operating income (loss)
$
July
August
658,000 $ 1,034,000
453,460 X
197,000
650,460
7,540
720,000 X
169,000
712,780
44,000
756,780
277,220
241,000 X
241,000
889,000
482,000
$ (881,460) $ (204,780)
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