Asked by Heath Gillette on Apr 27, 2024
Verified
Lefelmann Corporation, which has only one product, has provided the following data concerning its most recent month of operations:
The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.Required:a. What is the unit product cost for the month under variable costing?b. What is the unit product cost for the month under absorption costing?c. Prepare a contribution format income statement for the month using variable costing.d. Prepare an income statement for the month using absorption costing.e. Reconcile the variable costing and absorption costing net operating incomes for the month.
Variable Costing
An accounting approach that only considers variable costs—costs that change with the level of output—in product costing and decision-making.
Absorption Costing
A financial technique that encompasses all costs associated with manufacturing (including both fixed and variable expenses) in the pricing of a product.
Contribution Format
A layout for income statements where costs are classified as variable or fixed to show the contribution margin and net operating income.
- Understand the concepts of variable and absorption costing.
- Calculate unit product costs under variable and absorption costing methods.
- Prepare income statements using variable and absorption costing.
Verified Answer
SS
sienna stephanApr 30, 2024
Final Answer :
a. & b. Unit product costsVariable costing:
Absorption costing:
c. & d. Income statementsVariable costing income statement
Absorption costing income statement
e.ReconciliationManufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory − Fixed manufacturing overhead in beginning inventory = ($23 per unit × 300 units) − ($23 per unit × 500 units) = −$4,600
Absorption costing: c. & d. Income statementsVariable costing income statement Absorption costing income statement e.ReconciliationManufacturing overhead deferred in (released from) inventory = Fixed manufacturing overhead in ending inventory − Fixed manufacturing overhead in beginning inventory = ($23 per unit × 300 units) − ($23 per unit × 500 units) = −$4,600
Learning Objectives
- Understand the concepts of variable and absorption costing.
- Calculate unit product costs under variable and absorption costing methods.
- Prepare income statements using variable and absorption costing.