Solution-Compute the unit product cost under absorption

Compute the unit product cost under absorption costing

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Reference no: EM133110576

Question - Harvey Co. produces a single product. The company provides you with the following information:

Number of units in beginning inventory	0
Number of units sold this year	20,000
Number of units produced this year	25,000
Unit Sales price	$30
Variable Costs per unit:
Direct Materials	$5
Direct Labour	$3
Manufacturing overhead (indirect)	$2
Selling & Administrative	$3
Total	$13

Fixed Costs per year:
Manufacturing overhead (indirect)	$150,000
Selling & Administrative	$100,000

Required -

1. Compute the unit product cost under absorption costing.

2. Compute the unit product cost under variable costing.

3. Compute the gross profit for the units sold.

4. Compute the contribution margin for the units sold.

5. Compute Net Income under absorption costing (ignore income taxes).

6. Compute Net Income under variable costing (ignore income taxes).

7. Reconcile by way of a numerical analysis the difference in the net incomes reported in points 5 & 6 above.

Reference no: EM133110576

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Compute the unit product cost under absorption costing

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Reference no: EM133110576

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