Reference no: EM132586979

Advance Products, Inc., has just organized a new division to manufacture and sell specially designed tables using select hardwoods for personal computers. The division's monthly costs are shown in the schedule below:

Manufacturing costs:

Variable costs per unit:

Direct materials: $86
Variable manufacturing overhead: $4
Fixed manufacturing overhead costs per month: $240,000

Selling and administrative costs:

Variable: 15% of sales
Fixed per month: $160,000

Advance Products regards all of its workers as full-time employees and the company has a long-standing no-layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labor costs in its fixed manufacturing overhead.

During the first month of operations, the following activity was recorded:

Units produced 4,000

Units sold 3,200

Selling price per unit $250

Required

Question a) Compute the unit product cost under absorption costing.

Question b) Compute the unit product cost under Variable costing.

Question c) Prepare an income statement for the month using absorption costing

Question d) Prepare a contribution format income statement for the month using variable costing