Question

Dodner Company uses an absorption costing system in accounting for the single product it manufactures. The following selected data are for the year 2020: Sales (20,000 $720,000 units) Direct materials $259,200 used Direct labor $86,400 costs Variable manufacturing $25,920 overhead Fixed manufacturing $34,560 overhead

Answer 1

			unit product cost
		Absorption costing		Variable costing
	DM	10.8		10.8
	DL	3.6		3.6
	VMOH	2.16		2.16
		16.56		16.56
	FMOH	2.88		0
	Unit product cost	19.44		16.56

Dodner Company
Income Statement-Variable Costing
For the Year Ended December 31, 2020
	Sales						720000
	Variable Costs:
	Cost of goods sold:
		Direct Materials				259200
		Direct Labor				86400
		Variable Manufacturing overhead (24000*2.16)				51840
	Total Production cost					397440
	Less: Inventory (4000*16.56)					66240	331200
	Manufacturing Margin						388800
	Variable selling and administrative expenses						43200
	Contribution margin						345600
	Fixed Cost:
	Fixed Manufacturing overhead					69120
	Fixed selling and administrative					144000	213120
	Net Income						132480
Dodner Company
Income Statement-Absorption Costing
For the Year Ended December 31, 2020
	Sales						720000
	Cost of goods sold:
		Direct Materials				259200
		Direct Labor				86400
		Manufacturing overhead				120960
	Total Production Cost					466560
	Less: Inventory					77760	388800
	Gross Margin						331200
	Selling and administrative expenses						187200
	Net Income						144000