Task: Abbitt Company, which has only one product, has provided the following data concerning its most recent month of operations:
Selling price ................................................................ $142
Units in beginning inventory ............................................ 0
Units produced ......................................................... 2,500
Units sold .................................................................. 2,300
Units in ending inventory ............................................ 200
Variable costs per unit:
Direct materials .......................................................... $22
Direct labor ................................................................ $57
Variable manufacturing overhead ............................... $1
Variable selling and administrative ............................ $6
Fixed costs:
Fixed manufacturing overhead......................... $82,500
Fixed selling and administrative....................... $41,40
Q1. What is the unit product cost for the month under variable costing?
A) $80
B) $119
C) $113
D) $86
Q2. What is the unit product cost for the month under absorption costing?
A) $86
B) $119
C) $113
D) $80
Q3. The total contribution margin for the month under the variable costing approach is:
A) $66,700
B) $128,800
C) $46,300
D) $142,600
Q4. The total gross margin for the month under the absorption costing approach is:
A) $11,500
B) $66,700
C) $89,300
D) $128,800
Q5. What is the net operating income for the month under variable costing?
A) $4,900
B) $11,500
C) $6,600
D) ($11,100)
Q6. What is the net operating income for the month under absorption costing?
A) ($11,100)
B) $11,500
C) $6,600
D) $4,900