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Posted: March 12th, 2024
Exercise 8-7 Variable and Absorption Costing Unit Product Costs; Income Statements [LO1, LO2]
Baxtell Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Confused With Your Assignment Instructions?Don’t worry! Our essay writing and assignment help services are designed to make things clear. We’ll review your instructions thoroughly and contact you if anything needs clarification. Our support team is available 24/7 to answer questions and ensure your custom paper meets your expectations perfectly. |
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Manufacturing: |
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Direct materials |
$ |
39 |
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Direct labour |
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21 |
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Variable manufacturing overhead |
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3 |
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Variable selling and administrative |
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6 |
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Fixed costs per year: |
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Fixed manufacturing overhead |
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302,500 |
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Fixed selling and administrative expense |
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177,800 |
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During the year, the company produced 30,250 units and sold 25,400 units. The selling price of the company’s product is $90 per unit. |
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Required: |
1. |
Assume that the company uses absorption costing. |
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a. |
Compute the unit product cost. |
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b. |
Prepare an income statement for the year. |
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2. |
Assume that the company uses variable costing. |
a. |
Compute the unit product cost. |
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b. |
Prepare an income statement for the year.
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