Reference no: EM132468740

UHF Antennas, Inc., produces and sells a unique television antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been reported for the first month of the new plant's operation:

Selling price                               $108

Beginning inventory                         0

Units produced                         35,000

Units sold                               30,000

Selling price per unit                       $50

Selling and Admin expenses:

Variable per unit                             $2

Fixed (total)                         $360,000

Manufacturing costs:

Direct material cost per unit              $9

Direct labour cost per unit                 $8

Variable overhead cost per unit          $3

Fixed overhead cost (Total)         $350,000

• Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month. Assume that direct labour is a variable cost.

Question 1: Assuming that the company uses absorption costing, compute the unit product cost and come up with an income statement.

Question 2: Assuming that the company uses variable costing, compute the unit product cost and come up with an income statement.

Question 3: Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported operating income.