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Problem - Income Statements under Absorption and Variable Costing
In the coming year, Kalling Company expects to sell 28,700 units at $32 each. Kalling's controller provided the following information for the coming year.
Units production
30,000
Unit direct materials
$9.95
Unit direct labor
$2.75
Unit variable overhead
$1.65
Unit fixed overhead*
$2.50
Unit selling expense (variable)
$2.00
Total fixed selling expense
$65,500
Total fixed administrative expense
$231,000
The unit fixed overhead is based on 30,000 units produced.
Required:
1. Calculate the cost of one unit of product under absorption costing.
2. Calculate the cost of one unit of product under variable costing.
3. Calculate operating income under absorption costing for next year.
4. Calculate operating income under variable costing for next year.
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