Answer:
Instructions are listed below
Explanation:
Giving the following information:
Variable costs per unit:
Manufacturing:
Direct materials $ 11
Direct labor $ 3
Variable manufacturing overhead $ 1
Variable selling and administrative $ 1
Fixed costs per year:
Fixed manufacturing overhead $ 330,000
Fixed selling and administrative $ 240,000
During the year, the company produced 30,000 units and sold 23,000 units.
The selling price of the company’s product is $43 per unit
1) Absorption costing= direct materials + direct labor + total manufacturing overhead per unit
Absorption costing (per unit)= 11 + 3 + (1 + 330000/30000)= $26
2) Income statement:
Sales= 23000*43= $989000
Cost of goods sold= 23000*26= $598000
Gross income= $391000
Total selling and administrative expense= (1*23000)+240000= 263,000
Net operating income= $128,000
3) Variable costing= direct materials + direct labor + variable manufacturing overhead + variable selling and administrative expense
Variable costing= 11 + 3 + 1 + 1= $16
4) Contribution format income statement:
Sales= 989000
Variable costs= 16*23000= 368,000
Contribution margin= 621,000
Fixed manufacturing overhead= $ 330,000
Fixed selling and administrative= $ 240,000
Total fixed costs= 570,000
Net profit= 51,000
