Dilithium Batteries is a division of Enterprise Corporation. The division manufactures and sells a long-life battery used in a wide variety of applications. During the coming year, it expects to sell 55,000 units for $34 per unit. Nyota Uthura is the division manager. She is considering producing either 55,000 or 88,000 units during the period.
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Division Information for 2014
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Beginning inventory
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0
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Expected sales in units
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55,000
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Selling price per unit
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$34
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Variable manufacturing costs per unit
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$14
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Fixed manufacturing overhead costs (total)
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$440,000
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Fixed manufacturing overhead costs per unit:
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Based on 55,000 units
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$8 per unit ($440,000/55,000)
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Based on 88,000 units
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$5 per unit ($440,000/88,000)
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Manufacturing cost per unit:
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Based on 55,000 units
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$22 per unit ($14 variable + $8 fixed)
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Based on 88,000 units
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$19 per unit ($14 variable + $5 fixed)
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Variable and administrative expenses
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$2
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Fixed selling and administrative expenses (total)
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$42,900
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Prepare an absorption costing income statement, with one column showing the result if 55,000 units are produced and one column showing the results if 88,000 units are produced.