Biscayne Industries has determined the cost of manufacturing a unit of product as follows, based on normal production of 100,000 units per year:   Direct materials……………………………………….. $5 Direct labor…...……………………………………….. $4 Variable factory overhead……………………………..$3 Fixed factory overhead………………………………...$3 Total cost…………………………………………………$15                                                                                March          April Units produced………………                                 12,000        8,000 Units sold…………………….                                   8,000         12,000 Selling and administrative  Expenses (all fixed)..............                             $12,000      $12,000   The selling price is $20 per unit. There were no inventories on March 1, and there is no work in process on April 30.   Required: Prepare comparative income statements for each month under each of the following: Absorption costing (include under or overapplied fixed overhead). Variable costing

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Biscayne Industries has determined the cost of manufacturing a unit of product as follows, based on normal production of 100,000 units per year:

 

Direct materials……………………………………….. $5

Direct labor…...……………………………………….. $4

Variable factory overhead……………………………..$3

Fixed factory overhead………………………………...$3

Total cost…………………………………………………$15



                                                                               March          April

Units produced………………                                 12,000        8,000

Units sold…………………….                                   8,000         12,000

Selling and administrative 

Expenses (all fixed)..............                             $12,000      $12,000

 

The selling price is $20 per unit. There were no inventories on March 1, and there is no work in process on April 30.

 

Required:

Prepare comparative income statements for each month under each of the following:

  1. Absorption costing (include under or overapplied fixed overhead).

  2. Variable costing

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