Question

Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 44,000 units and sold 36,000 units at a price of $140 per unit. Manufacturing costs Direct materials per unit $ 60 Direct labor per unit $ 22 Variable overhead per unit $ 8 Fixed overhead for the year $ 528,000 Selling and administrative costs Variable selling and administrative cost per unit $ 11 Fixed selling and administrative cost per year $ 105,000

Answer 1

Instructions are listed below.

Step-by-step explanation:

Giving the following information:

The company produced 44,000 units

Sold 36,000 units for $140 per unit.

Manufacturing costs:

Direct materials per unit $ 60

Direct labor per unit $ 22

Variable overhead per unit $ 8

The fixed overhead for the year $ 528,000

Selling and administrative costs:

Variable selling and administrative cost per unit $ 11

Fixed selling and administrative cost per year $ 105,000

I will assume that the required answer is an income statement using absorption and variable costing:

Absorption costing:

It includes the fixed overhead in the manufactured costs:

Unitary cost= direct material + direct labor + unitary variable overhead + unitary fixed overhead

Unitary cost= 60 + 22 + 8 + (528,000/44,000)= $102

Income statement:

Sales= 36,000*140= 5,040,000

COGS= (36,000*102)= (3,672,000)

Gross profit= 1,368,000

Variable selling and administrative= (11*36,000)= (396,000)

Fixed selling and administrative= (105,000)

Net operating income= 867,000

Variable costing:

Under variable cost, fixed overhead is not included in manufacturing costs.

Unitary cost= direct material + direct labor + variable overhead

Unitay cost= 90

Income statement:

Sales= 5,040,000

Variable cost= (90*36,000)= (3,240,000)

Contribution margin= 1,800,000

Fixed overhead= (528,000)

Variable selling and administrative= (11*36,000)= (396,000)

Fixed selling and administrative= (105,000)

Net operating income= $771,000