Problem: Farron Company, which has only one product, has provided the following data concerning its most recent month of operations:
Selling price $92
Units in beginning inventory 0
Units produced 8,700
Units sold 8,300
Units in ending inventory 400
Variable costs per unit:
Direct materials $13
Direct labor 55
Variable manufacturing overhead 1
Variable selling and administrative 5
Fixed costs:
Fixed manufacturing overhead $130,500
Fixed selling and administrative 8,300
1) What is the unit product cost for the month under variable costing?
A) $69
B) $84
C) $89
D) $74
2) What is the unit product cost for the month under absorption costing?
A) $74
B) $89
C) $69
D) $84
3) What is the net income for the month under variable costing?
A) $10,600
B) ($17,000)
C) $16,600
D) $6,000
4) What is the net income for the month under absorption costing?
A) ($17,000)
B) $16,600
C) $6,000
D) $10,600