Information for Fresh Air Products is given in D8.12.
Calculate total product cost and prepare an income statement using variable costing.
a. Assuming the company uses variable costing:
1. Calculate the manufacturing cost per unit.
2. Prepare a variable-costing income statement for the first month of operation.
b. Reconcile the difference in net income between the absorption-costing and variable-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.