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.
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.
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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Question
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.
![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
Total fixed cost per month
Units
Produced
24,000
24,000
The product sells for $45 per unit. Production and sales data for July and August, the first two months of operations, follow:
$6
9
2
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
2
$19
$ 96,000
169,000
$ 265,000
Units Sold
20,000,
28,000
July
August
The company's Accounting Department has prepared the following absorption costing income statements for July and August
July
$ 900,000
420,000
480,000
209,000
$ 271,000
August
$1,260,000
588,000
672,000
225,000
$ 447,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F68bd143b-b5a9-4975-a1bd-e82645417c98%2Fec69d304-0371-4e55-bda5-27f991436743%2Fd3oc1m8_processed.jpeg&w=3840&q=75)
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
Fixed selling and administrative
Total fixed cost per month
Units
Produced
24,000
24,000
The product sells for $45 per unit. Production and sales data for July and August, the first two months of operations, follow:
$6
9
2
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
2
$19
$ 96,000
169,000
$ 265,000
Units Sold
20,000,
28,000
July
August
The company's Accounting Department has prepared the following absorption costing income statements for July and August
July
$ 900,000
420,000
480,000
209,000
$ 271,000
August
$1,260,000
588,000
672,000
225,000
$ 447,000
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