Moona Inc. produces Mobile phones. Information of the company's operations last year appear below: Fixed cost: Fixed Manufacturing overhead Rs 40,000 Fixed Selling & Administrative Rs 60,000 Selling Price per unit Rs 100 Variable cost per unit: Direct Materials Rs 30 Direct labor Rs 10 Variable Manufacturing overhead Rs 5 Variable Selling & Administrative Rs 2 Units In beginning Inventory 0 Units Produced 2000 Units sold 1900 Required: a. Compute the unit product cost under both absorption and variable costing. b. Prepare an income statement for the year using absorption costing. c. Prepare a contribution format income statement for the year using variable costing. Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year.
Moona Inc. produces Mobile phones. Information of the company's operations last year appear below: Fixed cost: Fixed Manufacturing overhead Rs 40,000 Fixed Selling & Administrative Rs 60,000 Selling Price per unit Rs 100 Variable cost per unit: Direct Materials Rs 30 Direct labor Rs 10 Variable Manufacturing overhead Rs 5 Variable Selling & Administrative Rs 2 Units In beginning Inventory 0 Units Produced 2000 Units sold 1900 Required: a. Compute the unit product cost under both absorption and variable costing. b. Prepare an income statement for the year using absorption costing. c. Prepare a contribution format income statement for the year using variable costing. Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Q1
Moona Inc. produces Mobile phones. Information of the company's operations last year appear below:
|
Fixed cost: |
|
|
Fixed Manufacturing overhead |
Rs 40,000 |
|
Fixed Selling & Administrative |
Rs 60,000 |
|
|
|
|
Selling Price per unit |
Rs 100 |
|
|
|
|
Variable cost per unit: |
|
|
Direct Materials |
Rs 30 |
|
Direct labor |
Rs 10 |
|
Variable Manufacturing overhead |
Rs 5 |
|
Variable Selling & Administrative |
Rs 2 |
|
|
|
|
Units In beginning Inventory |
0 |
|
Units Produced |
2000 |
|
Units sold |
1900 |
Required:
a. Compute the unit product cost under both absorption and variable costing.
b. Prepare an income statement for the year using absorption costing.
c. Prepare a contribution format income statement for the year using variable costing.
- Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year.
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