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.