Mahugh Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price$174 Units in beginning inventory 0 Units produced 3,770 Units sold 3,450 Units in ending inventory 320 Variable costs per unit: Direct materials$47 Direct labor$57 Variable manufacturing overhead$16 Variable selling and administrative$11 Fixed costs: Fixed manufacturing overhead$113,100 Fixed selling and administrative$13,800 Required:a.What is the unit product cost for the month under variable costing? (Do not round intermediate calculations.) b.What is the unit product cost for the month under absorption costing? c.Prepare a contribution format income statement for the month using variable costing. d.Prepare an income statement for the month using absorption costing. e.Reconcile the variable costing and absorption costing net operating incomes for the month.

Variable Costing is a method of cost allocation in which only variable direct costs are assigned as…

Answered: Mahugh Corporation, which has only one…

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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Mahugh Corporation, which has only one product, has provided the following data concerning its most recent month of operations:


Selling price	$	174

Units in beginning inventory		0
Units produced		3,770
Units sold		3,450
Units in ending inventory		320

Variable costs per unit:
Direct materials	$	47
Direct labor	$	57
Variable manufacturing overhead	$	16
Variable selling and administrative	$	11
Fixed costs:
Fixed manufacturing overhead	$	113,100
Fixed selling and administrative	$	13,800

Required:

a.	What is the unit product cost for the month under variable costing? (Do not round intermediate calculations.)

b.	What is the unit product cost for the month under absorption costing?

c.	Prepare a contribution format income statement for the month using variable costing.

d.	Prepare an income statement for the month using absorption costing.

e.	Reconcile the variable costing and absorption costing net operating incomes for the month.

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