udiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customer’s ear. Cost data for the product follow: Variable costs per unit: Direct materials $ 7 Direct labour 14 Variable factory overhead 9 Variable selling and administrative 7 Total variable costs per unit $ 37 Fixed costs per month: Fixed manufacturing overhead $ 242,400 Fixed selling and administrative 181,800 Total fixed cost per month $ 424,200 The product sells for $61 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Units Produced Units Sold May 20,200 15,600 June 20,200 24,800 Income statements prepared by the Accounting Department using absorption costing are presented below: May June Sales $ 951,600 $ 1,512,800 Cost of goods sold: Beginning inventory 0 193,200 Add cost of goods manufactured 848,400 848,400 Goods available for sale 848,400 1,041,600 Less ending inventory 193,200 0 Cost of goods sold 655,200 1,041,600 Gross margin 296,400 471,200 Selling and administrative expenses 291,000 355,400 Operating income $ 5,400 $ 115,800 Required: 1. Determine the unit product cost under each of the following methods. 2. Prepare variable costing income statements for May and June using the contribution approach. (Do not leave any empty spaces; input a 0 wherever it is required.) 3. Reconcile the variable costing and absorption costing operating income figures. (

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customer’s ear. Cost data for the product follow:


Variable costs per unit:
Direct materials	$	7
Direct labour		14
Variable factory overhead		9
Variable selling and administrative		7
Total variable costs per unit	$	37
Fixed costs per month:
Fixed manufacturing overhead	$	242,400
Fixed selling and administrative		181,800
Total fixed cost per month	$	424,200

The product sells for $61 per unit. Production and sales data for May and June, the first two months of operations, are as follows:

	Units Produced	Units Sold
May	20,200	15,600
June	20,200	24,800

Income statements prepared by the Accounting Department using absorption costing are presented below:

	May	June
Sales	$	951,600	$	1,512,800
Cost of goods sold:
Beginning inventory		0		193,200
Add cost of goods manufactured		848,400		848,400
Goods available for sale		848,400		1,041,600
Less ending inventory		193,200		0
Cost of goods sold		655,200		1,041,600
Gross margin		296,400		471,200
Selling and administrative expenses		291,000		355,400
Operating income	$	5,400	$	115,800

Required:

1. Determine the unit product cost under each of the following methods.

2. Prepare variable costing income statements for May and June using the contribution approach. (Do not leave any empty spaces; input a 0 wherever it is required.)

3. Reconcile the variable costing and absorption costing operating income figures. (Loss amounts should be indicated with a minus sign.)

Please dont provide solution image based thanks

Expert Solution

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions