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Variable cost per uni

Variable cost per uni

FINANCIAL ACCOUNTING
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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KC Ltd manufactures and sells a single product. Cost data for the product are given below Variable cost per unit $6 $11 $5 Direct Materials Direct labour Variable manufacturing overhead Variable selling and administrative $3 Fixed costs per month Fixed manufacturing overhead Fixed selling and administrative $315,000 245,000 The product sells for $60 per unit. The number of units produced and sold in January is 17,500 and 15,000 respectively. In February, the number of units produced is unchanged but the number of units sold is 20,000. The company prepared the following absorption costing income statement for January and February as below: January $900,000 |600,000 300,000 290,000 10,000 February $1,200,000 800,000 400,000 305,000 95,000 Sales Cost of goods sold Gross margin Selling and admin Net operating income Required: (a) Prepare the variable costing income statement for January and February. (b) Explain the difference between variable costing and absorption costing income statement for January and February.
Transcribed Image Text:KC Ltd manufactures and sells a single product. Cost data for the product are given below Variable cost per unit $6 $11 $5 Direct Materials Direct labour Variable manufacturing overhead Variable selling and administrative $3 Fixed costs per month Fixed manufacturing overhead Fixed selling and administrative $315,000 245,000 The product sells for $60 per unit. The number of units produced and sold in January is 17,500 and 15,000 respectively. In February, the number of units produced is unchanged but the number of units sold is 20,000. The company prepared the following absorption costing income statement for January and February as below: January $900,000 |600,000 300,000 290,000 10,000 February $1,200,000 800,000 400,000 305,000 95,000 Sales Cost of goods sold Gross margin Selling and admin Net operating income Required: (a) Prepare the variable costing income statement for January and February. (b) Explain the difference between variable costing and absorption costing income statement for January and February.
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