blue mountain products manufactures and sells a variety of camping products recently 4138214

Blue Mountain Products manufactures and sells a variety of camping products. Recently, the company opened a new plant to manufacture a lightweight, self-standing tent. Cost and sales data for the first month of operations (June 2012) are as follows:

Manufacturing costs

Fixed overhead ………………………………………………………. $200,000

Variable overhead …………………………………………………… $4 per tent

Direct labour ………………………………………………………. $16 per tent

Direct material …………………………………………………….. $40 per tent

Beginning inventory …………………………………………………….. 0 tents

Tents produced …………………………………………………………. 10,000

Tents sold …………………………………………………………………. 9,000

Selling and administrative costs

Fixed …………………………………………………………………. $400,000

Variable ……………………………………………………….. $6 per tent sold

The tent sells for $150. Management is interested in the opening month’s results and has asked for an income statement.

Instructions

(a) Assuming the company uses absorption costing:

1. Calculate the manufacturing cost per unit.

2. Prepare an absorption-costing income statement for the month of June 2012.

(b) Assuming the company uses variable costing:

1. Calculate the manufacturing cost per unit.

2. Prepare a variable-costing income statement for the month of June 2012.

(c) Reconcile the difference in net income between the absorption-costing and variable-costing methods.

(d) Assuming the company uses throughput costing:

1. Calculate the manufacturing cost per unit.

2. Prepare a throughput-costing income statement for the month of June 2012.

(e) Reconcile the difference in net income between the variable-costing and throughput-costing methods.

Blue Mountain Products manufactures and sells a variety of camping

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