Answered: Assume the company uses super-variable…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

XYZ company manufactures and sells one product. The following information pertains to the company’s first year of operations:

Variable cost per unit:

Direct materials $80

Fixed costs per year:

Direct labor $1,404,000

Fixed manufacturing overhead $3,402,000

Fixed selling and administrative $1,617,000

The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 54,000 units and sold 49,000 units. The company’s only product is sold for $238 per unit.

Assume the company uses super-variable costing. Determine the unit product cost for the year.
Assume the company uses super-variable costing. Prepare an income statement for the year using super variable costing.
Briefly describe why companies use super variable costing.

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