ADMS 2510 Lecture 8: ch08.pdf
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The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:
Beginning inventory | 0 | |
Units produced | 34,000 | |
Units sold | 25,900 | |
Selling price per unit | $ | 482 |
Selling and administrative expenses: | ||
Variable per unit | $ | 16 |
Fixed per year | $ | 362,600 |
Manufacturing costs: | ||
Direct materials cost per unit | $ | 240 |
Direct labor cost per unit | $ | 56 |
Variable manufacturing overhead cost per unit | $ | 34 |
Fixed manufacturing overhead per year | $ | 578,000 |
Assume that direct labor is a variable cost.
Required:
a. Compute the unit product cost under both the absorption costing and variable costing approaches.
b. Prepare an income statement for the year using absorption costing.
c. Prepare an income statement for the year using variable costing.
d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month:
Direct materials | $ | 82,000 | |||||||||||||||||||||
Direct labor | $ | 41,500 | |||||||||||||||||||||
Variable manufacturing overhead | $ | 20,200 | |||||||||||||||||||||
Fixed manufacturing overhead | 31,900 | ||||||||||||||||||||||
Total manufacturing overhead | $ | 52,100 | |||||||||||||||||||||
Variable selling expense | $ | 14,600 | |||||||||||||||||||||
Fixed selling expense | 23,200 | ||||||||||||||||||||||
Total selling expense | $ | 37,800 | |||||||||||||||||||||
Variable administrative expense | $ | 5,300 | |||||||||||||||||||||
Fixed administrative expense | 27,600 | ||||||||||||||||||||||
Total administrative expense | $ | 32,900 | |||||||||||||||||||||
3. With respect to cost classifications for manufacturers: a. What is the total manufacturing cost? b. What is the total nonmanufacturing cost? c. What is the total conversion cost and prime cost?
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