Netro Company, which has only one product, has provided the following data concerning its most recent month of operations:
|
Selling price |
$91 |
|
Units in beginning inventory |
100 |
|
Units produced |
1,800 |
|
Units sold |
1,400 |
|
Units in ending inventory |
500 |
|
Variable costs per unit: |
|
|
Direct materials |
$49 |
|
Direct labor |
$13 |
|
Variable manufacturing overhead |
$2 |
|
Variable selling and administrative |
$7 |
|
Fixed costs: |
|
|
Fixed manufacturing overhead |
$14,400 |
|
Fixed selling and administrative |
$7,000 |
The company produces the same number of units every month, although the sales I units vary from month to month. The company”s variable costs per unit and total fixed costs have been constant from month to month.
Required:
a. Prepare an income statement for the month using the contribution format and the variable costing method.
b. Prepare an income statement for the month using the absorption costing method.