Reference no: EM13355858

Determine the over head cost from the given data.

Variable and absorption costing unit product costs and income statement; Explanation of Difference in Net Operating Income
Wiengot Antennas, Inc., produces and sells a unique type of TV antenna. The company has just opened a new plant of manufacture the antenna, and the following cost and revenue data have been provided for the first month of the plant\\\'s operation in the form of a worksheet.

 

Beginning inventory	$0
Units Produced	40,000
Units Sold	35,000
Selling price per unit	$60
Selling and administrative expenses:
Variable per unit	$2
Fixed (total)	$560,000
Manufacturing costs:
Direct material cost per unit	$15
Direct labor cost per unit	$7
Variable manufacturing overhead cost per unit	$2
Fixed manufacturing overhead cost (total)	$640,000

Since the new antenna is unique in design, management is anxious to see how profitable it will be and has asked that an income statement be prepared for the month.

Required:

Explain the reason for any difference in the ending inventory balances under the two costing methods and the impact of this difference on reported net operating income.