MANAGERIAL ACCOUNTING FOR MANAGERS
5th Edition
ISBN: 9781264196456
Author: Noreen
Publisher: MCG
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Textbook Question
Chapter 4A, Problem 4A.3E
Super-Variable Costing and Variable Costing Unit Product Costs and Income Statements LO4—2. LO4—6
Kelly Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations:
The company does not incur any variable
Required:
- Assume the company uses super-variable costing:
- Compute the unit product cost for Year 1 and Year 2.
- Prepare an income statement for Year 1 and Year 2.
- Assume the company uses a variable costing system that assigns $10 of direct labor cost to each unit produced:
- Compute the unit product cost for Year 1 and Year 2.
- Prepare an income statement for Year 1 and Year 2.
- Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net operating incomes in Years 1 and 2.
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