Exercise 8-7 Variable And Absorption Costing Unit Product Costs; Income Statements-Baxtell Company. Exercise 8-7 Variable and Absorption Costing Unit Product Costs; Income Statements [LO1, LO2]
| Baxtell Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: |
| Variable costs per unit: | ||||
| Manufacturing: | ||||
| Direct materials | $ | 39 | ||
| Direct labour | 21 | |||
| Variable manufacturing overhead | 3 | |||
| Variable selling and administrative | 6 | |||
| Fixed costs per year: | ||||
| Fixed manufacturing overhead | 302,500 | |||
| Fixed selling and administrative expense | 177,800 | |||
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| During the year, the company produced 30,250 units and sold 25,400 units. The selling price of the company’s product is $90 per unit. | ||||
| Required: | ||||
| 1. | Assume that the company uses absorption costing. | |||
| a. | Compute the unit product cost. | |||
| b. | Prepare an income statement for the year. |
| 2. | Assume that the company uses variable costing. |
| a. | Compute the unit product cost. |
| b. | Prepare an income statement for the year. |
Exercise 8-7 Variable And Absorption Costing Unit Product Costs; Income Statements-Baxtell Company
