Solution
Vasudha answered on
Feb 16 2021
Problem 1
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ative analysis in the green cells
Kitty Hawk manufactures and distributes high end drones. The following costs are available for the year end. The company had no beginning inventory. Last year they produced 1,800 units and but only sold 1,600 units. The unit selling price was $4,300 and expenses were:
Variable Cost per Unit Units Produced 1,800
Direct Materials 900 Units Sold 1,600
Direct Labor 750 Units Remaining 200
Variable Mfg Over Head 350 Unit selling price 4,300
Variable selling and admin 65
Annual Fixed Costs 2,065
Mfg overhead fixed 950,000 527.78
Fixed Selling and admin Expenses 87,500 48.61 2,641.39
1.Compute the cost of manufacturing one unit for both variable and absorption costing
Fixed Overhead 1,037,500 576.39 fixed cost per unit Total Fixed Cost/ Total Units produced.
Units produced 1,800
Determine the product cost for each method Variable Absorption
Direct Materials 900 900
Direct Labor 750 750
Variable Mfg OverHead 350 350
Variable selling and admin 0 0
Fixed Cost per unit - 0 576.39 528
Total Cost per unit 2,000 2,576.39 2,528
2. Prepare an income statement for both variable and absorption costing
Variable Costing
Income Stmt Per unit Variable
Units sold 1600 1,600
Sales 4,300 6,880,000
Variable Prod Costs 2,000 3,200,000
VCOGS 2,300 3,680,000
Less Variable selling expense 65 104,000
MFG Margin 2,235 3,576,000
Less Fixed Costs
Fixed Mfg Ohead 527.78 844,444
Fixed Selling 48.61 77,778
Total Fixed Costs 576.39 922,222
Net Income 1,658.61 2,653,778
Absorption Costing Per unit Absorption
Units 1800
Sales 4,300 7,740,000
COGS 2,528 4,550,000 COGS measures the direct cost involved in production of goods and services.
Gross Profit 1,772 3,190,000
Less Period Costs
Variable selling 65 117,000
Fixed...