Happy Hula manufactures authentic Hawaiian hula skirts that are purchased for traditional Hawaiian celebrations, costume parties, and other functions. During its first year of business, the company incurred the following costs: Variable Cost per Hula Skirt Direct materials $ 7.35 Direct labor 2.50 Variable manufacturing overhead 1.05 Variable selling & administrative expenses 0.40 Fixed cost per Month Fixed manufacturing overhead $15,900 Fixed selling and administrative expenses 4,950 Happy Hula charges $30 for each skirt that it sells. During the first month of operation, it made 1,500 skirts and sold 1,375 Calculate the unit product cost using absorption costing and variable costing. Prepare a variable costing income statement for last month. Prepare a full absorption costing income statement.
Happy Hula manufactures authentic Hawaiian hula skirts that are purchased for traditional Hawaiian celebrations, costume parties, and other functions. During its first year of business, the company incurred the following costs:
Variable Cost per Hula Skirt
Direct materials $ 7.35
Direct labor 2.50
Variable manufacturing overhead 1.05
Variable selling & administrative expenses 0.40
Fixed cost per Month
Fixed manufacturing overhead $15,900
Fixed selling and administrative expenses 4,950
Happy Hula charges $30 for each skirt that it sells. During the first month of operation, it made 1,500 skirts and sold 1,375
- Calculate the unit product cost using absorption costing and variable costing.
- Prepare a variable costing income statement for last month.
- Prepare a full absorption costing income statement.
- Explain the difference in operating income for the two costing systems.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
