80.2K

Verified Solution

Link Copied!

Coverall Inc. produces and sells a unique type of case for a standard-size tablet computer that is guaranteed waterproof but still allows for regular functionality of the tablet. The company has just opened a new plant to manufacture these cases, and the following cost and revenue data have been provided for the first month of the plants operation in the form of a worksheet:

Beginning inventory	$	0
Units produced		31,000
Units sold		20,500
Selling price per unit	$	83
Selling and administrative expenses:
Variable per unit	$	5
Fixed (total)	$	369,000
Manufacturing costs:
Direct materials cost per unit	$	21
Direct labour cost per unit	$	16
Variable manufacturing overhead cost per unit	$	6
Fixed manufacturing overhead cost (total)	$	558,000

Since the new case is unique in design, management is anxious to see how profitable it will be and has asked that an income statement be prepared for the month.

Required:

1. Assume that the company uses absorption costing.

a. Determine the unit product cost.

unit product cost _____

Prepare an income statement for the month. (Do not leave any empty spaces; input a 0 wherever it is required.)

Sales
Cost of goods sold:
Beginning inventoryselected answer correct
Add: Cost of goods manufacturedselected answer correct
Goods available for saleselected answer correct	0
Less: Ending inventoryselected answer correct		0
Gross marginselected answer correct		0
Selling and administrative expensesselected answer correct
Operating lossselected answer correct		$0

2. Assume that the company uses variable costing.

a. Determine the unit product cost.

unit product cost ______

b. Prepare a contribution format income statement for the month. (Do not leave any empty spaces; input a 0 wherever it is required.)

Sales
Variable expenses:
Variable cost of goods sold:
Beginning inventoryselected answer correct
Add: Variable manufacturing costsselected answer correct
Goods available for saleselected answer correct	0
Less: Ending inventoryselected answer correct
Variable cost of goods soldselected answer correct	0
Variable selling expenseselected answer correct		0
Contribution marginselected answer correct		0
Fixed expenses:
Fixed manufacturing overheadselected answer correct
Fixed selling and administrative expenseselected answer correct		0
Operating incomeselected answer incorrect		$0

Answer & Explanation Solved by verified expert

See Answer