Problem:
Oasimi Company, which has only one product, has provided the following data concerning its most recent month of operations:
Selling price............................................................................ $121
Units in beginning inventory....................................................... 0
Units produced........................................................................ 4,300
Units sold................................................................................ 4,000
Units in ending inventory............................................................ 300
Variable costs per unit:
Direct materials..................................................................... $44
Direct labor......................................................................... $35
Variable manufacturing overhead............................................. $7
Variable selling and administrative............................................ $5
Fixed costs:
Fixed manufacturing overhead................................................ $34,400
Fixed selling and administrative............................................... $72,000
Required:
Q1. What is the unit product cost for the month under variable costing?
Q2. Prepare an income statement for the month using the contribution format and the variable costing method.
Q3. Without preparing an income statement, determine the absorption costing net operating income for the month. (Hint: Using the reconciliation method)