"Paint More LLC"…Complete Solution! Thanks

Paint More LLC has organized a new division to manufacture and sell specialty paint. The division’s monthly costs are shown below:

Manufacturing costs:

Variable costs per unit:

Direct materials

$12

Variable manufacturing overhead

$1

Fixed manufacturing overhead costs (total)

$100,000

Selling and administrative costs:

Variable

7% of sales

Fixed (total)

$31,000

Because the production is highly automated, the company includes its labor costs in its fixed manufacturing overhead. The gallons of paint sell for $68 each. During September, the first month of operations, the following activity was recorded:







Units produced 5,000



Units sold 4,000






 

1.    Compute the unit product cost under:

1.    Absorption costing

2.    Variable costing

2.    Prepare an absorption costing income statement for September

3.    Prepare a contribution format income statement for September using variable costing