1. Sunshine Company manufactures and sells a single product. Cost data for the product are given below: Selling price Variable Costs per Unit: Direct Materials $65 Direct Labor 9 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 Production and sales data for January, the first month of operations is given below: Units Produced 18,000 Units Sold January 15,000 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.
1. Sunshine Company manufactures and sells a single product. Cost data for the product are given below: Selling price Variable Costs per Unit: Direct Materials $65 Direct Labor 9 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 Production and sales data for January, the first month of operations is given below: Units Produced 18,000 Units Sold January 15,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please answet the first few parts
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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