Bonn Corporation produces and sells aunique type of TV recording device. The company has just opened anew plant to manufacture the device. The following cost and revenuedata have been provided for the first month of the plant’soperation.
Beginninginventory 0
Unitsproduced 60,000
Unitssold 50,000
Selling price perunit $80
Selling and administrativeexpenses:
Variable perunit $4
Fixed $700,000
Manufacturing costs:
Direct materials cost perunit $20
Direct labor cost perunit $8
Variable manufacturing overhead costperunit $4
Fixed manufacturing overheadcost $800,000
Required:
Determine the unit product cost using absorption costing andvariable costing.
Prepare an income statement for the month using variablecosting.
Prepare an income statement for the month using absorptioncosting.
Explain why or why not the operating income is the same ifincome statements for absorption costing or variable costing areprepared.
