Stark and Company would like to evaluate one of the product lines that they sell...
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Accounting
Stark and Company would like to evaluate one of the product lines that they sell to the defense department. Every month the Stark and Company produce an identical number of units, although the sales in units differ from month to month.
Selling price
$105
Units in beginning inventory
110
Units produced
6,400
Units sold
6,100
Units in ending inventory
410
Variable costs per unit:
Direct materials
$62
Direct labour
$48
Variable manufacturing overhead
$3
Variable selling and administrative
$7
Fixed costs:
Fixed manufacturing overhead
$64,000
Fixed selling and administrative
$35,600
Submission Instructions:
1. Under variable costing, identify the unit product cost for the month.
2. What is the unit product cost for the month under absorption costing?
3. Prepare an income statement for the month using the contribution format and the variable costing method.
4. Prepare an income statement for the month using the absorption costing method.
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