1. Sunshine Company manufactures and sells a single product. Cost data for the product are given below: $65 Selling price Variable Costs per Unit: Direct Materials 8 Direct Labor Variable Manufacturing Overhead Variable Selling and Administrative 5 3 Fixed Cost per Unit Fixed manufacturing overhead Fixed selling and administrative expense $315,000 $250,000
1. Sunshine Company manufactures and sells a single product. Cost data for the product are given below: $65 Selling price Variable Costs per Unit: Direct Materials 8 Direct Labor Variable Manufacturing Overhead Variable Selling and Administrative 5 3 Fixed Cost per Unit Fixed manufacturing overhead Fixed selling and administrative expense $315,000 $250,000
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...
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![1. Sunshine Company manufactures and sells a single product. Cost data for the product are given
below:
Selling price
Variable Costs per Unit:
$65
Direct Materials
8
Direct Labor
9
Variable Manufacturing Overhead
Variable Selling and Administrative
3
Fixed Cost per Unit
Fixed manufacturing overhead
Fixed selling and administrative expense
$315,000
$250,000
Production and sales data for January, the first month of operations is given below:
Units Sold
15,000
Units Produced
January
18,000
Required:
a. Compute the unit product cost under: (i) Absorption costing (ii) Variable costing
b. Prepare the absorption costing income statement for January.
c. Prepare the variable costing income statement for January.
d. Reconcile the variable costing and absorption costing income statements for January.
e. Explain why the two different costing systems result in varying profits. Which costing system seems
more logical to you and why?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fccb22810-ef9b-425d-9933-4b45a72d5c32%2F88e9fee9-b101-41e4-ae73-bd1e30d4477c%2Fu2l79er_processed.png&w=3840&q=75)
Transcribed Image Text:1. Sunshine Company manufactures and sells a single product. Cost data for the product are given
below:
Selling price
Variable Costs per Unit:
$65
Direct Materials
8
Direct Labor
9
Variable Manufacturing Overhead
Variable Selling and Administrative
3
Fixed Cost per Unit
Fixed manufacturing overhead
Fixed selling and administrative expense
$315,000
$250,000
Production and sales data for January, the first month of operations is given below:
Units Sold
15,000
Units Produced
January
18,000
Required:
a. Compute the unit product cost under: (i) Absorption costing (ii) Variable costing
b. Prepare the absorption costing income statement for January.
c. Prepare the variable costing income statement for January.
d. Reconcile the variable costing and absorption costing income statements for January.
e. Explain why the two different costing systems result in varying profits. Which costing system seems
more logical to you and why?
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