Question

Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter. At this point, Ms. Tyler is manufacturing only one product-a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow: 31,500 28,500 Units produced Units sold Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 7.10 $ 7.80 $ 1.60 $ 6.80 Required: 1. Complete the following: a. Compute the unit product cost under absorption costing. b. What is the company's absorption costing net operating income (loss) for the quarter? c. Reconcile the variable and absorption costing net operating income (loss) figures. 3. During the second quarter of operations, the company again produced 31,500 units but sold 34,500 units. (Assume no change in total fixed costs.) a. What is the company's variable costing net operating income (loss) for the second quarter? b. What is the company's absorption costing net operating income (loss) for the second quarter? c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter.

Answer 1

Answers:

1.a) units product cost under absorption costing = 7.1+7.8+1.6+1.8

=18.3.

Note : in absorption costing unit cost is total cost.

1.b) selling price is not given the question, hence net operating profit can’t find., Sorry
   Profit on sale = (selling price per unit - product cost per unit)* units sold.

1.c) for reconciliation selling price per unit is required.

Selling price is required to slove rest of the question, please provide the same and re post it.,Thank u