Loker Corp. makes and sells garden hoses in 50 ft. lengths. The following information is available for the year just ended, the company’s first year of operations:
|Units produced: 8,000||Variable costs per unit:|
Units sold: 6,000||Manufacturing (Direct Materials, Direct Labor, and Variable Overhead) – $12.00 (total) Selling and Admin. – $2.00|
|Selling price:$25.00 per unit|
|Total fixed costs:|
|Overhead – $7,200|
|Selling and Admin.- $5,000|
REQUIRED (You can use abbreviations if you wish. Organize your answers in a readable way using the columns and rows below.):
- Compute the cost of one unit of product using absorption costing.
- Compute the cost of one unit of product using variable costing.
- Prepare an income statement for the year in the proper format using absorption costing.
- Prepare an income statement for the year in the proper format using variable costing.
- Provide a quantitative explanation/reconciliation of why the two net income amounts that you calculated above are different (or the same).
|Unit Cost: Absorption||Unit Cost: Variable|
|Income Statement: Absorption||Income Statement: Variable|