Reference no: EM13371625
BT Co, a beverage manufacturer, manufactures one product - TruBlood. BT accounts for its Finished Goods Inventory using FIFO. It incurs direct materials costs of $0.50 per unit produced. The line workers are paid (in total) $100 per hour.
BT pays its plant supervisors based in part on salary and in part on the number of units produced in a month.
The information for the last seven months of supervisors' salaries is as follows: Month Total Pay Units Produced
Dec X1 $45,000 2,500,000
Jan X1 49,100 2,700,000
Feb X1 42,000 2,300,000
Mar X1 39,100 1,700,000
AprX1 48,000 2,600,000
May X1 44,000 2,400,000
June X1 41,100 1,900,000
For the month ended 6/30/X1, BT sold 1,800,000 units at $2.00 per unit Other information for the month of June X1: Fixed Manufacturing Costs (other than Supervisor's Salary) $357,900 Fixed Selling & Administration Costs $60,000 Variable Selling & Administration Costs $0.30 per unit At 5/31/X1, there were 100,000 units in Ending Inventory.
Variable Costing 5/31 Ending Inventory was $60,000. Absorption Costing 5/31 Ending Inventory was $81,000. For the month ended 6/30/X1, there were 1,531 of direct labor hours incurred. BT employs an actual costing system.
REQUIRED: Provide the following (and support ALL of your work)-
a) BT's variable costing Income Statement for the month ended 6/30/X1
b) BT's absorption costing Income Statement for the month ended 6/30/X1
c) Reconcile and explain the difference between BT's Variable and Absorption Net Operating Income.