Reference no: EM132845663
Question - Linden Company manufactures and sells a single product. Cost data for the product follow:
Variable costs per unit:
Direct materials $5
Direct labor $10
Variable factory overhead $3
Variable selling and administrative $1
Total variable costs per unit $19
Fixed costs per month:
Fixed manufacturing overhead $108,000
Fixed selling and administrative $175,000
Total fixed cost per month $283,000
The product sells for $50 per unit. Production and sales data for May and June, the first two months of operations, are as follows:
Units Produced Units Sold
May 18,000 14,000
June 18,000 22,000
Income statements prepared by the accounting department, using absorption costing, are presented below:
May June
Sales $700,000 $1,100,000
Cost of goods sold $336,000 $528,000
Gross margin $364,000 $572,000
Selling and administrative expenses $189,000 $197,000
Net operating income $175,000 $375,000
Determine the unit product cost under absorption costing and variable costing?
Determine contribution format variable costing income statements for May and June?
Reconcile the variable costing and absorption costing net operating incomes.