Reference no: EM132846399

Question - ABC Company, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price $91

Units in beginning inventory 100

Units produced 1,800

Units sold 1,400

Units in ending inventory 500

Variable costs per unit:

Direct materials $49

Direct labor $13

Variable manufacturing overhead $2

Variable selling and administrative $7

Fixed costs:

Fixed manufacturing overhead $14,400

Fixed selling and administrative $7,000

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Required -

a. Prepare an income statement for the month using the contribution format and the variable costing method.

b. Prepare an income statement for the month using the absorption costing method.