Problem 6-22 (Algo) Variable Costing Income Statements; Income Reconciliation [LO6-1, LO6-2, LO6-3] Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor July 27,000 August 27,000 Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month $ 274,000 The product sells for $50 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income 23,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. $3 31,000 11 2 1 $17 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July $ 1,150,000 $ 108,000 166,000 460,000 690,000 189,000 $ 501,000 August $1,550,000 620,000 930,000 197,000 $ 733,000 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes.
Problem 6-22 (Algo) Variable Costing Income Statements; Income Reconciliation [LO6-1, LO6-2, LO6-3] Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor July 27,000 August 27,000 Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month $ 274,000 The product sells for $50 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income 23,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. $3 31,000 11 2 1 $17 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July $ 1,150,000 $ 108,000 166,000 460,000 690,000 189,000 $ 501,000 August $1,550,000 620,000 930,000 197,000 $ 733,000 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 2BE
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![Problem 6-22 (Algo) Variable Costing Income Statements; Income Reconciliation [LO6-1, LO6-2, LO6-3]
Denton Company manufactures and sells a single product. Cost data for the product are given:
Variable costs per unit:
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling and administrative
July
27,000
August 27,000
Sales
Total variable cost per unit
Fixed costs per month:
Fixed manufacturing overhead
Fixed selling and administrative
Total fixed cost per month
$ 274,000
The product sells for $50 per unit. Production and sales data for July and August, the first two months of operations, follow:
Units Produced
Units Sold
23,000
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
$3
31,000
11
2
1
$ 17
$ 108,000
The company's Accounting Department has prepared the following absorption costing income statements for July and August:
July
$ 1,150,000
166,000
460,000
690,000
189,000
$ 501,000
August
$1,550,000
620,000
930,000
197,000
$ 733,000
Required:
1. Determine the unit product cost under:
a. Absorption costing.
b. Variable costing.
2. Prepare variable costing income statements for July and August.
3. Reconcile the variable costing and absorption costing net operating incomes.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4b4890dc-b7f0-4fe5-a09e-162f7feaee87%2Fc1e75454-e897-4fb5-b6d1-92e03a278f5c%2Fowzeltb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 6-22 (Algo) Variable Costing Income Statements; Income Reconciliation [LO6-1, LO6-2, LO6-3]
Denton Company manufactures and sells a single product. Cost data for the product are given:
Variable costs per unit:
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling and administrative
July
27,000
August 27,000
Sales
Total variable cost per unit
Fixed costs per month:
Fixed manufacturing overhead
Fixed selling and administrative
Total fixed cost per month
$ 274,000
The product sells for $50 per unit. Production and sales data for July and August, the first two months of operations, follow:
Units Produced
Units Sold
23,000
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
$3
31,000
11
2
1
$ 17
$ 108,000
The company's Accounting Department has prepared the following absorption costing income statements for July and August:
July
$ 1,150,000
166,000
460,000
690,000
189,000
$ 501,000
August
$1,550,000
620,000
930,000
197,000
$ 733,000
Required:
1. Determine the unit product cost under:
a. Absorption costing.
b. Variable costing.
2. Prepare variable costing income statements for July and August.
3. Reconcile the variable costing and absorption costing net operating incomes.
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