Question

2) Peoria Company assembled the following data: Units in beginning inventory Units produced Units solod 5,000 4,500 $25 per unit $10 per unit Sales price Variable costs: Production Selling and administrative $4 per unit Fixed costs: Production Selling and administrative $15,000 $10,000 Calculate the following: a. Absorption costing product cost (cost per unit) b. Variable costing net income c. Absorption Costing Net Income

Answer 1

a) Calculation of Unit cost Under Absorption Costing Direct Cost Fixed Manufacturing over heads (15000/5000) Unit Product Cost 10 3 13 Absorption Costing Unit Product Cost 13 Variable Costing income Statement Sales (4500*25 LESS: Variable Expense Variable Prodcution cost (4500*10 Variable Selling and Administrative Expense 4500*4 Total Varible Expenses Total Contribution Margin Less:Fixed Expenses Fixed manufacturing Overheads Fixed Selling and Administrative Expenses Total fixed Expenses Net operating income (loss 112500 45000 18000 63000 49500 15000 10000 25000 Net income 24500 ANSWER

Absorption Costing income Statement 112500 Sales (4500*25) Cost of Goods Sold cost of Goods Manufactures (4500 13) Gross Margin Total Selling and Administrative Overheads (10000+18000) Income From Operations 58500 54000 28000 | Net income| 26000| Answer

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