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.