206. Ivancevic Inc., which produces a single product, has provided the following data for its
most recent month of operation:
Number of units produced 5,000
Variable costs per unit:
Direct materials $11
Direct labor $39
Variable manufacturing overhead $6
Variable selling and administrative expenses $1
Fixed costs:
Fixed manufacturing overhead $225,000
Fixed selling and administrative expenses $465,000
The company had no beginning or ending inventories.
Required:
Compute the unit product cost under variable costing. Show your work!
6-262
207. Sproull Inc., which produces a single product, has provided the following data for its most
recent month of operation:
Number of units produced 2,000
Variable costs per unit:
Direct materials $21
Direct labor $75
Variable manufacturing overhead $7
Variable selling and administrative expenses $6
Fixed costs:
Fixed manufacturing overhead $116,000
Fixed selling and administrative expenses $40,000
The company had no beginning or ending inventories.
Required:
a. Compute the unit product cost under absorption costing. Show your work!
b. Compute the unit product cost under variable costing. Show your work!
208. Jimerson Corporation produces a single product and has the following cost structure:
Number of units produced each year 7,000
Variable costs per unit:
Direct materials $22
Direct labor $96
Variable manufacturing overhead $6
Variable selling and administrative expenses $2
Fixed costs per year:
Fixed manufacturing overhead $644,000
Fixed selling and administrative expenses $91,000
Required:
Compute the unit product cost under absorption costing. Show your work!
6-265
209. Redstone Corporation produces a single product and has the following cost structure:
Number of units produced each year 4,000
Variable costs per unit:
Direct materials $80
Direct labor $82
Variable manufacturing overhead $2
Variable selling and administrative expenses $3
Fixed costs per year:
Fixed manufacturing overhead $176,000
Fixed selling and administrative expenses $316,000
Required:
a. Compute the unit product cost under absorption costing. Show your work!
b. Compute the unit product cost under variable costing. Show your work!
6-267
210. Nelson Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
Selling price $84
Units in beginning inventory 500
Units produced 1,900
Units sold 2,100
Units in ending inventory 300
Variable costs per unit:
Direct materials $25
Direct labor $10
Variable manufacturing overhead $7
Variable selling and administrative $10
Fixed costs:
Fixed manufacturing overhead $38,000
Fixed selling and administrative $21,000
The company produces the same number of units every month, although the sales in units vary
from month to month. The company’s variable costs per unit and total fixed costs have been
constant from month to month.
Required:
a. Prepare a contribution format income statement for the month using variable costing.
b. Prepare an income statement for the month using absorption costing.
6-270
211. Oakes Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
Selling price $108
Units in beginning inventory 0
Units produced 1,100
Units sold 900
Units in ending inventory 200
Variable costs per unit:
Direct materials $28
Direct labor $30
Variable manufacturing overhead $7
Variable selling and administrative $11
Fixed costs:
Fixed manufacturing overhead $14,300
Fixed selling and administrative $1,800
Required:
a. Prepare a contribution format income statement for the month using variable costing.
b. Prepare an income statement for the month using absorption costing.
6-273
212. Pabbatti Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
Selling price $112
Units in beginning inventory 500
Units produced 2,800
Units sold 2,900
Units in ending inventory 400
Variable costs per unit:
Direct materials $37
Direct labor $19
Variable manufacturing overhead $7
Variable selling and administrative $5
Fixed costs:
Fixed manufacturing overhead $109,200
Fixed selling and administrative $5,800
The company produces the same number of units every month, although the sales in units vary
from month to month. The company’s variable costs per unit and total fixed costs have been
constant from month to month.
Required:
a. What is the unit product cost for the month under variable costing?
b. Prepare a contribution format income statement for the month using variable costing.
c. Without preparing an income statement, determine the absorption costing net operating
income for the month. (Hint: Use the reconciliation method.)
6-276
213. Italia Espresso Machina Inc. produces a single product. Data concerning the company’s
operations last year appear below:
Units in beginning inventory 0
Units produced 2,000
Units sold 1,900
Selling price per unit $100
Variable costs per unit:
Direct materials $30
Direct labor $10
Variable manufacturing overhead $5
Variable selling and administrative $2
Fixed costs in total:
Fixed manufacturing overhead $40,000
Fixed selling and administrative $60,000
Required:
a. Compute the unit product cost under both absorption and variable costing.
b. Prepare an income statement for the year using absorption costing.
c. Prepare a contribution format income statement for the year using variable costing.
d. Prepare a report reconciling the difference in net operating income between absorption and
variable costing for the year.
6-279
214. Mahugh Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
Selling price $122
Units in beginning inventory 0
Units produced 8,300
Units sold 8,200
Units in ending inventory 100
Variable costs per unit:
Direct materials $27
Direct labor $46
Variable manufacturing overhead $4
Variable selling and administrative $7
Fixed costs:
Fixed manufacturing overhead $199,200
Fixed selling and administrative $106,600
Required:
a. What is the unit product cost for the month under variable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare a contribution format income statement for the month using variable costing.
d. Prepare an income statement for the month using absorption costing.
e. Reconcile the variable costing and absorption costing net operating incomes for the month.
