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5. Maxwell Company manufactures and sells a single product. The following costs were incurred during...

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Accounting

5. Maxwell Company manufactures and sells a single product. The following costs were incurred during the companys rst year of operations:
Variable costs per unit:
Manufacturing:
Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . $17
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6
Variable manufacturing overhead . . . . . . . . . . . . $1
Variable selling and administrative . . . . . . . . . . . $3
Fixed costs per year:
Fixed manufacturing overhead. . . . . . . . . . . . . . . . . $16,000
Fixed selling and administrative expenses. . . . . . . . $11,000
During the year, the company produced 21,000 units and sold 19,000 units. The selling price of the companys product is $ 53.5 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. (2.5 marks)
2. Assume that the company uses variable costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year. (2.5 marks)

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