Reference no: EM132771519

The EG Company produces and sells one product: a microwave oven. The following data refer to the year just completed:

Beginning inventory $0

Units produced 25,000

Units sold 20,000

Sales price per unit $400

Selling and administrative expenses:

Variable per unit $15

Fixed (total) $275,000

Manufacturing costs:

Direct materials cost per unit $200

Direct labour cost per unit $50

Variable overhead cost per unit $30

Fixed overhead (total) $300,000

Assume that direct labour is a variable cost.

Problem a. What is the unit product cost for the month under absorption costing?

Problem b. What is the unit product cost for the month under variable costing?

Problem c. Explain the difference between variable and absorption costing.

Problem d. Make an income statement for the month using the absorption costing method.