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linda_us, Master's Degree
Category: Single Problem
Satisfied Customers: 7291
Experience:  A tutor for Business, Finance, Accounts and other related topics.
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Hey Linda, This is another question you answered a few

This answer was rated:

Hey Linda,

This is another question you answered a few months ago that I would like to view the answer to:

Cost (50 points)

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

Submit an Excel document which each tab labeled by item number in good form that demonstrates the following:
Compute the unit product cost under:
Absorption costing
Variable costing
Prepare an absorption costing income statement for September
Prepare a contribution format income statement for September using variable costing
Customer: replied 3 years ago.

Hi Linda,


Thanks. It looks like there is something wrong here.

You list the variable unit cost as 33 and the absorption unit cost as 13, but then use 33 for the absorption income statement and 13 for the variable/ contribution income statement.

Am I missing something, are the titles confused in the first part, please explain.

Thanks, Nicole

Hi Nicole
Your observation is correct I made a typo, the cost listed under variable costing should be $13 and under absorption costing should be $33.

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