DC and Marvel would like to evaluate one of the product linesthat they sell to defense department. Every month the Stark andCompany produce an identical number of units, although the sales inunits differ from month to month.
Selling price | $111 | 109 |
| | |
Units in beginning inventory | 400 | 360 |
Units produced | 8,800 | 6900 |
Units sold | 8,900 | 7200 |
| | |
Variable costs per unit: | | |
Direct materials | $34 | 29 |
Direct labour | $37 | 31 |
Variable manufacturing overhead | $3 | 2 |
Variable selling and administrative | $9 | 7 |
| | |
Fixed costs: | | |
Fixed manufacturing overhead | $61,600 | 53,500 |
Fixed selling and administrative | $169,100 | 145,000 |
Required:
1) Compute the total ContributionMargin.
2) Compute the Operating Income underVariable Costing.
3) Prepare a reconciliation from yourVariable Costing Operating Income to compute Operating Income underabsorption costing.
