6-282
215. Qabar Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
Selling price $110
Units in beginning inventory 0
Units produced 4,600
Units sold 4,200
Units in ending inventory 400
Variable costs per unit:
Direct materials $46
Direct labor $28
Variable manufacturing overhead $5
Variable selling and administrative $10
Fixed costs:
Fixed manufacturing overhead $55,200
Fixed selling and administrative $25,200
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.)
6-285
216. Lee Corporation, which has only one product, has provided the following data concerning
its most recent month of operations:
Selling price $95
Units in beginning inventory 100
Units produced 6,200
Units sold 5,900
Units in ending inventory 400
Variable costs per unit:
Direct materials $42
Direct labor $28
Variable manufacturing overhead $1
Variable selling and administrative $5
Fixed costs:
Fixed manufacturing overhead $62,000
Fixed selling and administrative $35,400
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. Assume direct labor is a variable cost.
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.
217. The Dean Corporation produces and sells a single product. The following data refer to the
year just completed:
Beginning inventory 0
Units produced 20,000
Units sold 19,000
Selling price per unit $350
Selling and administrative expenses:
Variable per unit $10
Fixed (total) $225,000
Manufacturing costs:
Direct materials cost per unit $190
Direct labor cost per unit $40
Variable manufacturing overhead cost per unit $25
Fixed manufacturing overhead (total) $250,000
Assume that direct labor is a variable cost.
Required:
a. Compute the cost of a single unit of product under both the absorption costing and variable
costing approaches.
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. Reconcile the absorption costing and variable costing net operating income figures in (b) and
(c) above.
6-291
218. Hanks Corporation produces a single product. Operating data for the company and its
absorption costing income statements for the last two years are presented below:
Year 1 Year 2
Units in beginning inventory 0 1,000
Units produced 9,000 9,000
Units sold 8,000 10,000
Year 1 Year 2
Sales $80,000 $100,000
Cost of goods sold 48,000 60,000
Gross margin 32,000 40,000
Selling and administrative expenses 28,000 30,000
Net operating income $4,000 $10,000
Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead was $18,000 in
each year. This fixed manufacturing overhead was applied at a rate of $2 per unit. Variable
selling and administrative expenses were $1 per unit sold.
Required:
a. Compute the unit product cost in each year under variable costing.
b. Prepare new income statements for each year using variable costing.
c. Reconcile the absorption costing and variable costing net operating income for each year.
6-294
219. Breedon Corporation produces a single product. Data concerning the company’s
operations last year appear below:
Units in beginning inventory 0
Units produced 12,000
Units sold 11,250
Selling price per unit $90
Variable costs per unit:
Direct materials $20
Direct labor $10
Variable manufacturing overhead $8
Variable selling and administrative $5
Fixed costs in total:
Fixed manufacturing overhead $180,000
Fixed selling and administrative $150,000
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.
220. Zimmerli Corporation manufactures a single product. The following data pertain to the
company’s operations over the last two years:
Variable costing net operating income, last year $71,000
Variable costing net operating income, this year $87,000
Fixed manufacturing overhead costs deferred in inventory under absorption costing, last year
$22,000
Fixed manufacturing overhead costs released from inventory under absorption costing, this year
$32,000
Required:
a. Determine the absorption costing net operating income last year. Show your work!
b. Determine the absorption costing net operating income this year. Show your work!
221. Last year, Hruska Corporation’s variable costing net operating income was $92,200 and
ending inventory decreased by 600 units. Fixed manufacturing overhead cost per unit was $3 in
both beginning and ending inventory.
Required:
Determine the absorption costing net operating income for last year. Show your work!
6-299
222. Martz Corporation manufactures a single product. The following data pertain to the
company’s operations over the last two years:
Variable costing net operating income, last year $85,500
Variable costing net operating income, this year $105,400
Beginning inventory, last year 0 units
Ending inventory, last year 1,300 units
Ending inventory, this year 800 units
Fixed manufacturing overhead cost per unit both last year and this year $4 per unit
Required:
a. Determine the absorption costing net operating income for last year. Show your work!
b. Determine the absorption costing net operating income for this year. Show your work!
223. Last year, Rochester Corporation’s variable costing net operating income was $78,000.
The fixed manufacturing overhead costs released from inventory under absorption costing
amounted to $39,000.
Required:
Determine the absorption costing net operating income last year. Show your work!