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  • Exercise - Absorption and Variable Costing Method

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    Hassan Elbayya
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    The document provides data on a company's operations for a month including units produced, sold, and inventory levels as well as variable and fixed costs. It asks the reader to calculate the unit product cost under variable and absorption costing, and prepare income statements for the month under both methods. Variable costs include direct materials, direct labor, variable manufacturing overhead, and variable selling and administrative expenses. Fixed costs are manufacturing overhead of $30,000 and selling/administrative expenses of $10,000.

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    Exercise.absorption and Variable Costing Method

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    The document provides data on a company's operations for a month including units produced, sold, and inventory levels as well as variable and fixed costs. It asks the reader to calculate the unit product cost under variable and absorption costing, and prepare income statements for the month under both methods. Variable costs include direct materials, direct labor, variable manufacturing overhead, and variable selling and administrative expenses. Fixed costs are manufacturing overhead of $30,000 and selling/administrative expenses of $10,000.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    3 views3 pages

    Exercise - Absorption and Variable Costing Method

    Uploaded by

    Hassan Elbayya
    The document provides data on a company's operations for a month including units produced, sold, and inventory levels as well as variable and fixed costs. It asks the reader to calculate the unit product cost under variable and absorption costing, and prepare income statements for the month under both methods. Variable costs include direct materials, direct labor, variable manufacturing overhead, and variable selling and administrative expenses. Fixed costs are manufacturing overhead of $30,000 and selling/administrative expenses of $10,000.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    Absorption and

    variable costing
    method
    COST ACCOUNTING
     Exercise:
    Denton Company produces and sells a single product. The company has provided the
    following data concerning its recent month of operations:
    Selling price $20
    Units in beginning inventory 0
    Units produced 6,000
    Units sold 5,000
    Units in ending inventory 1,000
    Variable costs per unit:
    Direct materials $2
    Direct Labor $4
    Variable manufacturing $1
    Overhead
    Variable selling and $3
    Administrative expenses
     Fixed costs:
     Fixed manufacturing overhead
    $30,000
     Fixed selling and administrative
    $10,000
    expenses
    Required:
    a. Compute the unit product cost for the month under
    both variable costing and absorption costing.
    b. Prepare an income statement for the month under the
    absorption costing method.
    c. Prepare an income statement under the variable
    costing method.

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