Reference no: EM133111497
Question - Laurier Company had 300 units left in ending inventory last month. They have only one product. The following information is for its current month of operations:
Selling Price $120
Units Produced 8,800
Units Sold 9,000
Variable Costs per Unit:
Direct Materials $34
Direct Labour $37
Variable Manufacturing Overhead $3
Variable Selling and Administrative $9
Fixed Costs:
Fixed Manufacturing Overhead $79,200
Fixed Selling and Administrative $169,100
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) What is the value of ending inventory under absorption costing? Show calculation of Absorption cost per unit and how many units were left in ending inventory.
b) Prepare an income statement for this month in good form using the contribution format and the variable costing method.
c) Use the Reconciliation format between the variable costing and absorption costing methods for this month to calculate the absorption costing operating income. Explain the differences in your reconciliation.
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