Problem:
Keller Best Manufacturing produces a single product. The following data pertain to the company’s last operating month:
|
Selling price
Units in beginning inventoryUnits produced
Units sold
Units in ending inventory
Variable costs per unit:
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Fixed costs:
Fixed manufacturing overhead
Fixed selling and administrative
|
$130
0
3,000
2,500
500
$50
30
5
10
$ 60,000
10,000
|
Questions:
1. What was the total Contribution Margin for the month using the variable costing approach?
2. What was the Gross Margin for the month under the absorption costing approach?
3. What were the total Period Costs for the month under the variable costing approach?
4. What were the total Period Costs for the month under the absorption costing approach?
5. Explain the differences between the traditional and the contribution margin income statements.