Amanufacturing company that produces a single product has provided the following data related to its operations during May: Manufacturing costs: Variable costs per unit: Direct materials $22.50 Direct labor $20.00 Variable manufacturing overhead Fixed manufacturing overhead costs (total) $7.50 $875,000 Selling and administrative costs: Variable per unit Fixed (total) $5.00 $900,000 The product sells for $125 per unit. The company produced 35,000 units and sold 30,000 units in May. There is no beginning inventory. Required: a) Compute the breakeven sales dollars and margin of safety in sales dollars. b) Determine the unit product cost under: (2 marks) (3 marks) Absorption costing. ii. Variable costing. c) Prepare an income statement for the month using absorption costing. (5 marks)
Amanufacturing company that produces a single product has provided the following data related to its operations during May: Manufacturing costs: Variable costs per unit: Direct materials $22.50 Direct labor $20.00 Variable manufacturing overhead Fixed manufacturing overhead costs (total) $7.50 $875,000 Selling and administrative costs: Variable per unit Fixed (total) $5.00 $900,000 The product sells for $125 per unit. The company produced 35,000 units and sold 30,000 units in May. There is no beginning inventory. Required: a) Compute the breakeven sales dollars and margin of safety in sales dollars. b) Determine the unit product cost under: (2 marks) (3 marks) Absorption costing. ii. Variable costing. c) Prepare an income statement for the month using absorption costing. (5 marks)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
answer part c
Transcribed Image Text:Amanufacturing company that produces a single product has provided the following data related
to its operations during May:
Manufacturing costs:
Variable costs per unit:
Direct materials
$22.50
Direct labor
$20.00
Variable manufacturing overhead
Fixed manufacturing overhead costs (total)
$7.50
$875,000
Selling and administrative costs:
Variable per unit
Fixed (total)
$5.00
$900,000
The product sells for $125 per unit. The company produced 35,000 units and sold 30,000 units
in May. There is no beginning inventory.
Required:
a) Compute the breakeven sales dollars and margin of safety in sales dollars.
b) Determine the unit product cost under:
(2 marks)
(3 marks)
Absorption costing.
ii.
Variable costing.
c) Prepare an income statement for the month using absorption costing.
(5 marks)
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