1 answer

Rey Company's singie product sells at a price of $227 per unit Data for its single...

Question:

Rey Companys singie product sells at a price of $227 per unit Data for its single product for its first year of operations follow. се о Direct materials Direct labor Overhead costs 31 per unit $39 per unit Variable overhead Fixed overhead per year S13 per unit $420,000 per year Selling and administrative expenses Variable Fixed $29 per unit $222,000 per year 28,000 units Units produced and sold 1. Prepare an income statement for the year using absorption costing 2 Prepare an income statement for the year using variabie costing

Rey Company's singie product sells at a price of $227 per unit Data for its single product for its first year of operations follow. се о Direct materials Direct labor Overhead costs 31 per unit $39 per unit Variable overhead Fixed overhead per year S13 per unit $420,000 per year Selling and administrative expenses Variable Fixed $29 per unit $222,000 per year 28,000 units Units produced and sold 1. Prepare an income statement for the year using absorption costing 2 Prepare an income statement for the year using variabie costing

Answers

Construct The Absorption Costing Unit Product Cost
Direct Material 31
Direct labour 39
Variable Manufacturing overheads 13
Fixed Manufacturing overheads 15.00 (420000/28000)
Absorption costing unit prroduct cost 98.00
Construct the Absorption Costing Income Statement
Year 1
Sales $6,356,000
Cost of Goods sold 2744000
Gross Margin $3,612,000
Selling and distribution expense 1,034,000
Net operating income 2,578,000
Compute the Variable costing Unit Product cost
Direct Material 31
Direct labour 39
Variable Manufacturing overheads 13
Variable costing unit prroduct cost 83
Construct The Variable Costing Income Statement
YEAR 1
Sales 6,356,000
Less: Variable cost
   variable cost of goods sold 2,324,000
   Variable selling expense 812,000 3,136,000
Contribution margin 3,220,000
Fixed expense:
   Fixed Manufacturing overheads 420,000
   Fixed selling expense 222,000
Net operating Income 2,578,000
.

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