Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative $ 135,000 169,000 Total fixed cost per month $ 304,000 The product sells for $54 per unit. Production and sales data for July and August, the first two months of operations, follow: July August Units Produced 27,000 27,000 Units Sold 23,000 31,000 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income $4 9 4 1 $18 The company's Accounting Department has prepared the following absorption costing income statements for July and August July August $ 1,242,000 $1,674,000 506,000 736,000 192,000 $544,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. 7 Dranare variable cortinn Income statemente for the and Aunet 682,000 992,000 200,000 $ 792,000
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative $ 135,000 169,000 Total fixed cost per month $ 304,000 The product sells for $54 per unit. Production and sales data for July and August, the first two months of operations, follow: July August Units Produced 27,000 27,000 Units Sold 23,000 31,000 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income $4 9 4 1 $18 The company's Accounting Department has prepared the following absorption costing income statements for July and August July August $ 1,242,000 $1,674,000 506,000 736,000 192,000 $544,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. 7 Dranare variable cortinn Income statemente for the and Aunet 682,000 992,000 200,000 $ 792,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Required:
1. Determine the unit product cost under:
a. Absorption costing.
b. Variable costing.
2. Prepare variable costing income statements for July and August.
3. Reconcile the variable costing and absorption costing net operating incomes.
Transcribed Image Text:Denton Company manufactures and sells a single product. Cost data for the product are given:
Variable costs per unit:
Direct materials.
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Total variable cost per unit
Fixed costs per month:
Fixed manufacturing overhead
$ 135,000
Fixed selling and administrative
169,000
Total fixed cost per month
$ 304,000
The product sells for $54 per unit. Production and sales data for July and August, the first two months of operations, follow:
Units
Produced
July
August
Units Sold
23,000
31,000
The company's Accounting Department has prepared the following absorption costing income statements for July and August:
July
August
$ 1,242,000 $ 1,674,000
506,000
682,000
736,000
192,000
$544,000
27,000
27,000
$4
9
4
1
$18
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
Required:
1. Determine the unit product cost under:
a. Absorption costing.
b. Variable costing.
7 Dronare variable cortinn Income etatemente for lukcand Aunet
992,000
200,000
$ 792,000
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Step 1: Introduction of Marginal and Absorption costing
VIEWStep 2: Part 1 (a & b) Determination of unit product cost under absorption costing and variable costing:
VIEWStep 3: Part (2) Preparation of the variable costing income statements for July and August:
VIEWStep 4: Part (3) Reconciliation of Marginal and Absorption costing income statement
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