Reference no: EM132759495
Problem - Bittman Company produces picture frames. During its first year of operations, the company produced 10,000 frames and sold 9,000 frames at $12 per frame. The company's cost information includes the following:
Direct materials $2.00 per frame
Direct labor $3.00 per frame
Variable manufacturing overhead $1.00 per frame
Variable selling and administrative expenses $3.00 per frame
Fixed manufacturing overhead $20,000 per year
Fixed selling and administrative expenses $5,000 per year
Required -
Part (a) Compute the unit product cost under absorption costing.
Part (b) Compute the unit product cost under variable costing.
Part (c) Create an income statement using absorption costing.
Part (d) Create an income statement using variable costing.
Part (e) Explain the difference in the net operating income determined under the absorption and variable costing methods.