Assignment:
Manufacturing costs:
Fixed overhead $200,000
Variable Overhead $4.00 per Tent
Direct Labor $16.00 per Tent
Direct Materials $40 per tent
Beg. Inv. 0
Tents Produced 10,000
Tents Sold 9,000
Selling and admin costs.
Fixed $400,000
Variable $6 per tent sold
The tent sells for $150.00 and Management is interested in opening month's result and has asked for an income statement.
a. Assume the company uses absorption costing to calculate the manufacturing cost per unit:
i) $80.00
ii) Prepare an absorption costing income statement for the month of June 2005
b. Assuming the company uses variable costing, calculate the manufacturing cost per unit:
i) $60.00
ii) Prepare a variable costing income statement for the month of June 2005
c. Reconcile the differences in the net income between the two methods.