Reference no: EM132617218

Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs.

                                                               January                                 February

Beginning inventory                                0                               ---

Production                                      2,500                                3,000

Sales                                              2,250                                3,025

Other information:

Selling price                                                         $20.00

Standard variable manufacturing cost/unit                   $8.00

Standard variable market/admin. cost/unit                   $4.00

Standard fixed manufacturing overhead cost/month     $40,000

Standard fixed market/admin. cost/month                 $20,000

Budgeted denominator level per month (output units)       4,000

There were no beginning or ending inventories of materials or work-in-process.

Problem 1: What is the per unit variable cost?

Problem 2: What is the per unit manufacturing cost using absorption costing?

Problem 3: What would Beauty Supply Company's operating income (loss) be for January and February, respectively, using the variable costing approach?