Chapter 21, Problem 38P

This problem continues the Piedmont Computer Problem situation from Chapter 20. Piedmont Computer Company manufactures personal computers and tablets. Based on the latest information from the cost accountant, using the current sales mix, the weighted-average sales price per unit is $750 and the weighed-average variable cost per unit is $450. The company does not expect the sales mix to vary for the next year. Assume the beginning balance in Finished Goods Inventory is $0. Additional data for the first month of 2020:

Requirements

1. 1. Compute the product cost per unit produced under absorption costing and under variable costing.
2. 2. Prepare income statements for January 2020 using:
   1. a. absorption costing.
   2. b. variable costing.
3. 3. Is operating income higher under absorption costing or variable costing in January? What causes the difference?