Answer:
Instructions are listed below.
Explanation:
Giving the following information:
Units produced 40,000 Units sold 35,000
Selling price per unit $ 83
Selling and administrative expenses:
Variable per unit $ 3
Fixed (per month) $ 570,000
Manufacturing costs:
Direct materials cost per unit $ 15
Direct labor cost per unit $ 10
Variable manufacturing overhead cost per unit $ 3
Fixed manufacturing overhead cost (per month) $ 720,000
1) A) Absorption costing= direct material + direct labor + variable overhead + fixed overhead
Absorption costing= 15 + 10 + 3 + (720,000/40,000)= $46
B) Income statement:
Sales= 35,000* 83= 2,905,000
COGS= 46*35,000= (1,610,000)
Gross profit= 1,295,000
Selling and administrative expenses= 3*35,000 + 570,000= (675,000)
Net operating income= 620,000
2) A) variable cost= direct material + direct labor + variable overhead + variable selling and administrative
unitary variable cost= 15 + 10 + 3 + 3= 31
B) income statement:
Sales= 2,905,000
Variable cost= 31*35,000= (1,085,000)
Contribution margin= 1,820,000
Fixed costs:
Fixed manufacturing overhead cost= (720,000)
Fixed selling and administrative= (570,000)
Net operating income= 530,000
