New division to manufacture


The following information applies to the questions displayed below.] Far North Telecom, Ltd., of Ontario, has organized a new division to manufacture and sell specialty cellular telephones. The division's monthly costs are shown below: Manufacturing costs: Variable costs per unit: Direct materials $89 Variable manufacturing overhead $4 Fixed manufacturing overhead costs (total) $243,600 Selling and administrative costs: Variable 12% of sales Fixed (total) $155,000 Far North Telecom regards all of its workers as full-time employees and the company has a long-standing no layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labor costs in its fixed manufacturing overhead. The cellular phones sell for $290 each. During September, the first month of operations, the following activity was recorded: Units produced 4,200 Units sold 3,400 rev: 02-09-2011 3.value: 2.00 points Requirement 1: (a) Compute the unit product cost under Absorption costing. (Omit the "tiny_mce_markerquot; sign in your response.) Unit product cost $ (b) Compute the unit product cost under Variable costing. (Omit the "tiny_mce_markerquot; sign in your response.)

Unit product cost $ rev: 02-09-2011 check my workeBook Links (4)references 4.value: 2.00 points Requirement 2: Prepare an absorption costing income statement for September. (Input all amounts as positive values. Omit the "tiny_mce_markerquot; sign in your response.) $ $ rev: 02-09-2011 check my workeBook Links (4)references 5.value: 2.00 points Requirement 3: Prepare a contribution format income statement for September using variable costing. $ Variable expenses: $ Fixed expenses: $ rev: 02-09-2011 check my workeBook Links (4)references 6.value: 2.00 points Requirement 4: Assume that the company must obtain additional financing in order to continue operations. As a member of top management, would you prefer to rely on the statement in (2) above or in (3) above when meeting with a group of prospective investors? rev: 02-09-2011 Absorption costing statement Variable costing statement check my workeBook Links (4)references 7.value: 2.00 points Requirement 5: Reconcile the absorption costing and variable costing net operating incomes in requirement 2 and 3 above. (Negative amounts should be indicated by a minus sign. Omit the "tiny_mce_markerquot; sign in your response.) $ : Fixed manufacturing overhead cost deferred $?

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Accounting Basics: New division to manufacture
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