Fresh Air Products Company manufactures and sells a variety of camping products. Recently the company opened a new plant to manufacture a deluxe portable cooking unit. Cost and sales data for the first month of operations are shown below:
- Manufacturing Costs
- Fixed Overhead $120,000
- Variable overhead $3 per unit
- Direct labor $12 per unit
- Direct material $30 per unit
- Beginning inventory 0 units
- Units produced 10,000
- Units sold 8,000
- Selling and Administrative Costs
- Fixed $200,000
- Variable $4 per unit sold
The portable cooking unit sells for $110. Management is interested in the opening month's results and has asked for an income statement.
Instructions
Assume the company uses absorption costing. Calculate the production cost per unit and prepare an income statement for the month of June, 2011.