Refer to the data in Exercise 6-9 for CompuDesk. Assume in this exercise that the company uses absorption costing.
In Exercise 6-9, CompuDesk, Inc., makes an oak desk specially designed for personal computers. The desk sells for $200.
Data for last year's operations follow:
Units in beginning inventory . . . . . . . . . . . . . . . $ 0
Units produced . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000
Units sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,000
Units in ending inventory . . . . . . . . . . . . . . . . . $ 1,000
Variable costs per unit:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . $ 60
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30
Variable manufacturing overhead . . . . . . . . . $ 10
Variable selling and administrative . . . . . . . . $ 20
Total variable cost per unit . . . . . . . . . . . . . . . $ 120
Fixed costs:
Fixed manufacturing overhead . . . . . . . . . . . $ 300,000
Fixed selling and administrative . . . . . . . . . . $ 450,000
Total fixed costs . . . . . . . . . . . . . . . . . . . . . . . $750,000
Required:
1. Compute the unit product cost for one computer desk.
2. Prepare an income statement.