This preview has intentionally blurred sections. Sign up to view the full version.
Unformatted text preview: ‘6)
Variable and Absorption Costing 1. Using variable costing, compute unit product cost, breakeven, and prepare an income statement.
2. Using absorption costing, compute unit product cost, and prepare an income statement. Addison, Inc. makes a single product, an indoor ﬁreplace. Data for last year is as follows: Selling price per fireplace $420
Manufacturing costs: Variable per unit produced: Direct materials 5135
Direct labor $43
Variable manufacturing overhead $37
Fixed manufacturing overhead per vear $210,000
Selling and administrative expenses:
Variable per unit sold $45
Fixed per year $190,000
Units in beginning inventory 0
Units produced during the year 5,000
Units sold during the year 4,500 Use the data to answer the following. Replace every ? with a formula. 1. Assume the company uses variable costing: Compute the unit product cost for one ﬁreplace ( $ 215 Sgl'es «I 5 1,390,000
Variable expenses: Variable cost of goods sold Variable selling and administrative expenses
Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses
Net operating income :Compute the number of ﬁreplaces required to breakeuen «I 2,500 2. Assume the company uses absorption costing: Compute the unit product cost for one ﬁreplace sf $ 25? Prepare an Income statement for the year Sales Cost of goods sold Gross margin Selling and administrative expenses
Net operating income ...
View Full Document