Managerial Accounting: P6-18B McCracken Aerial, Inc., produces and sells a unique

Managerial Accounting 
Problem 6-18B Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in Net Operating Income 
McCracken Aerial, Inc., produces and sells a unique type of TV antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been provided for the first month of the plant’s operation: 
Beginning inventory - 
 Units produced 50,500 
 Units sold 44,000 
 Selling price per unit 72 
 Selling and administrative expenses: 
  Variable per unit 2 
  Fixed (total) 552,000 
Manufacturing costs 
  Direct materials cost per unit 14.40 
  Direct labor cost per unit 7.20 
  Variable manufacturing overhead cost per unit 4.00 
  Fixed manufacturing overhead cost (total) 808,000 

Because the new antenna is unique in design, management is anxious to see how profitable it will be and has asked that an income statement be prepared for the month. 

Required: 
1. Assume that the company uses absorption costing. 
a. Determine the unit product cost. (Do not round intermediate calculations and round your final answer to 1 decimal place.) 
b. Prepare an income statement for the month. 
2. Assume that the company uses variable costing. 
a. Determine the unit product cost. (Do not round intermediate calculations and round your final answer to 1 decimal place.) 
b. Prepare a contribution format income statement for the month.
Powered by