Assume the company uses absorption costing. Compute the unit product cost in each year. b. Assume the company uses absorption costing. Prepare an income statement for each year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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BLUE INC. has provided the following data for its two most recent years of operation:

Selling price per unit P90

Manufacturing costs:

Variable manufacturing cost per unit produced:

Direct materials P13

Direct labor P6

Variable manufacturing overhead P4

Fixed manufacturing overhead per year P224,000

Selling and administrative expenses:

Variable selling and administrative expense per unit sold P5

Fixed selling and administrative expense per year P74,000

 Year 1 Year 2

Units in beginning inventory 0 1,000

Units produced during the year 8,000 7,000

Units sold during the year 7,000 5,000

Units in ending inventory 1,000 3,000

Required:

a. Assume the company uses absorption costing. Compute the unit product cost in each year.

b. Assume the company uses absorption costing. Prepare an income statement for each year.

 

 

 

 

 

 

 

 

 

 

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