McCracken Aerial Inc produces and sells a unique type of TV

McCracken Aerial, Inc., produces and sells a unique type of TV antenna. The company has just opened a first month of the plant\'s operation: Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: 54,250 47,000 $ 66 Fixed (total) Manufacturing costs $561,000 S 13.2 $6.6 Direct materials cost per unit Direct labor cost per unit Variable manufacturing ov Fixed manufacturing overhead cost (total) erhead cost per unit$ $ 705,250 Because the new antenna is unique in design, management is anxious to see how profitable it will be and has asked that an income statement be prepared for the month. Required: 1. Assume that the company uses absorption costing a. Determine the unit product cost. (Do not round intermediate calculations and round your final answer to 1 decimal place.) Unit product cost

Solution

Construct The Absorption Costing Unit Product Cost Direct Material 13.20 Direct labour 6.60 Variable Manufacturing overheads 3.00 Fixed Manufacturing overheads 13.00 Absorption costing unit prroduct cost 35.80 Construct the Absorption Costing Income Statement Under FIFO Year 1 Sales $3,102,000 Cost of Goods sold 1682600 Gross Margin $1,419,400 Selling and distribution expense 749,000 Net operating income 670,400 Compute the Variable costing Unit Product cost Direct Material 13.20 Direct labour 6.60 Variable Manufacturing overheads 3.00 Variable costing unit prroduct cost 22.80 Construct The Variable Costing Income Statement under FIFO Sales 3,102,000 Less: Variable cost    variable cost of goods sold 1,071,600    Variable selling expense 188,000 1,259,600 Contribution margin 1,842,400 Fixed expense:    Fixed Manufacturing overheads 705,250    Fixed selling expense 561,000 Net operating Income 576,150