T3-2 Variable costing versus absorption costing (LO 1, 2) Fiendish Friends makes Halloween costumes. The company incurred the following total costs to produce 25,000 costumes. Direct materials $200,000 Direct labor 150,000 Variable overhead 50,000 Fixed overhead 100,000 Questions a.Under the absorption costing method, what is the average unit product cost? Using this method, how much product cost would be recorded on the income statement if 20,000 units were sold? b.Under the variable costing method, what is the average unit product cost? Using this method, how much product cost would be recorded on the income statement if 20,000 units were sold?
T3-2 Variable costing versus absorption costing (LO 1, 2) Fiendish Friends makes Halloween costumes. The company incurred the following total costs to produce 25,000 costumes. Direct materials $200,000 Direct labor 150,000 Variable overhead 50,000 Fixed overhead 100,000 Questions a.Under the absorption costing method, what is the average unit product cost? Using this method, how much product cost would be recorded on the income statement if 20,000 units were sold? b.Under the variable costing method, what is the average unit product cost? Using this method, how much product cost would be recorded on the income statement if 20,000 units were sold?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
T3-2 Variable costing versus absorption costing (LO 1, 2) Fiendish Friends makes Halloween costumes. The company incurred the following total costs to produce 25,000 costumes.
| Direct materials |
$200,000
|
| Direct labor |
150,000
|
| Variable |
50,000
|
| Fixed overhead |
100,000
|
Questions
a.Under the absorption costing method, what is the average unit product cost? Using this method, how much product cost would be recorded on the income statement if 20,000 units were sold?
b.Under the variable costing method, what is the average unit product cost? Using this method, how much product cost would be recorded on the income statement if 20,000 units were sold?
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