Pabbatti Corporation, which has only one product, has provided the following data concerning its most recent...

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Accounting

Pabbatti Corporation, which has only one product, has providedthe following data concerning its most recent month ofoperations:
  Selling price $ 94
  Units in beginning inventory 850
  Units produced 2,660
  Units sold 3,190
  Units in ending inventory 320
  Variable costs per unit:
  Direct materials $ 23
  Direct labor $ 16
  Variable manufacturing overhead $ 1
  Variable selling and administrative $ 19
  Fixed costs:
  Fixed manufacturing overhead $ 61,180
  Fixed selling and administrative $ 9,570
The company produces the same number of units every month,although the sales in units vary from month to month. The company'svariable costs per unit and total fixed costs have been constantfrom month to month. (Hint: Use the reconciliation method.)
Required:
a. What is the unit product cost for the monthunder variable costing?
b. Prepare a contribution format incomestatement for the month using variable costing.

c. Without preparing an income statement,determine the absorption costing net operating income for themonth.(Hint: Use the reconciliation method.)

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4.0 Ratings (623 Votes)

a Under vaiable costing only variable manufacturing cost is included in the unit product cost and fixed manufacturing overheads are considered as period cost not included in the unit product cost Calculation of Unit Product Cost for the month under Variable Costing Amounts in Direct materials 23 Direct labor 16 Variable manufacturing overhead 1 Unit See Answer

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Selling price	$	94
Units in beginning inventory		850
Units produced		2,660
Units sold		3,190
Units in ending inventory		320
Variable costs per unit:
Direct materials	$	23
Direct labor	$	16
Variable manufacturing overhead	$	1
Variable selling and administrative	$	19
Fixed costs:
Fixed manufacturing overhead	$	61,180
Fixed selling and administrative	$	9,570