Aldrin Products has organized a new division to manufacture and sell specially designed tables for mounting and using personal computers. Its new plant is highly automated and requires high monthly fixed costs as shown below. Manufacturing costs: Variable costs per unit: Direct materials P50 Direct labor 36 Overhead 4 Fixed overhead 240,000 Selling and administrative costs: Variable 12% of sales Fixed 160,000 During the month of operations, the following activity was recorded: Units produced 5,500 Units sold 5,200 Selling price per unit P300 Net materials variance-unfavorable 12,000 Net direct labor variance-favorable 5,000 Net variable overhead variance-favorable 2,500 The company has a normal capacity of 6,000 units Required: 1 Operating income under absorption costing and variable costing. 2. Reconciliation of income under absorption costing and variable costing.
- Aldrin Products has organized a new division to manufacture and sell specially designed tables for mounting and using personal computers. Its new plant is highly automated and requires high monthly fixed costs as shown below.
Variable costs per unit:
Direct materials P50
Direct labor 36
Fixed overhead 240,000
Selling and administrative costs:
Variable 12% of sales
Fixed 160,000
During the month of operations, the following activity was recorded:
Units produced 5,500
Units sold 5,200
Selling price per unit P300
Net materials variance-unfavorable 12,000
Net direct labor variance-favorable 5,000
Net variable overhead variance-favorable 2,500
The company has a normal capacity of 6,000 units
Required:
1 Operating income under absorption costing and variable costing.
2. Reconciliation of income under absorption costing and variable costing.
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