Information for Fresh Air Products is given in D8.12.
Calculate total product cost and prepare an income statement using normal costing.
a. Assume the company uses normal costing and uses the budgeted volume of 13,500 units to allocate the fixed overhead rate rather than the actual production volume of 12,000 units. The company expenses production volume variance to cost of goods sold in the accounting period in which it occurs. Do the following:
1. Calculate the manufacturing cost per unit.
2. Prepare a normal-costing income statement for the first month of operation.
b. Reconcile the difference in net income between the absorption-costing and normal-costing methods.
Fresh Air Products manufactures and sells a variety of camping products. Recently the company opened a new plant to manufacture a deluxe portable cooking unit. Cost and sales data for the first month of operations are shown below:
Calculate total product cost and prepare an income statement using absorption costing.
The portable cooking unit sells for $110. Management is interested in the opening month's results and has asked for an income statement.
Assuming the company uses absorption costing:
a. Calculate the manufacturing cost per unit.
b. Prepare an absorption-costing income statement for the first month of operation.