Herro Corporation began operations inJuly and manufactured 40,000 units during the month with thefollowing...Herro...

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Accounting

Herro Corporation began operations inJuly and manufactured 40,000 units during the month with thefollowing unit costs:
Directmaterials                      $7.00
Directlabor                            4.00
Variableoverhead                  3.00
Variable marketingcost          3.00
Total fixed factory overhead is$400,000 per month. During July, 35,000 units were sold at a priceof $40, and fixed marketing and administrative expenses were$150,000.
Required:
Calculate the unit product cost of each unit using absorptioncosting and variable costing.
Prepare a variable costing income statement for HerroCorporation for the month of July.
Explain how variable costing differs from absorptioncosting.

Answer & Explanation Solved by verified expert

3.9 Ratings (518 Votes)

Answera Unit product cost under Absorption costing 24 per unit Explanation Unit product cost under Absorption costingDirect materials Direct Labor Variable manufacturing overhead fixed manufacturing overhead 74310 24 per unit Unit fixed manufacturing overhead fixed manufacturing overheadNo See Answer

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In: AccountingHerro Corporation began operations inJuly and manufactured 40,000 units during the month with thefollowing...Herro Corporation began operations inJuly and manufactured 40,000 units during the month with thefollowing unit costs:Directmaterials $7.00Directlabor 4.00Variableoverhead 3.00Variable marketingcost 3.00Total fixed factory overhead is$400,000 per month. During July, 35,000 units were sold at a priceof $40, and fixed marketing and administrative expenses were$150,000.Required:Calculate the unit product cost of each unit using absorptioncosting and variable costing.Prepare a variable costing income statement for HerroCorporation for the month of July.Explain how variable costing differs from absorptioncosting.