Deck 16: Super-Variable Costing

Question 1

Super-variable costing is a costing method mat treats direct labor and manufacturing overhead costs as product costs.

Answer 1

False

Question 2

Buckbee Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 37,000 units and sold 32,000 units. The company's only product is sold for $261 per unit.
Assume that the company uses a variable costing system that assigns $17 of direct labor cost to each unit that is produced. The unit product cost under this costing system is:

A) $114 per unit
B) $191 per unit
C) $97 per unit
D) $224 per unit

Answer 2

A
Explanation: Variable costing unit product cost:

Question 3

Letcher Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 56,000 units and sold 54,000 units. The company's only product is sold for $227 per unit.
The company is considering using either super-variable costing or a variable costing system that assigns $11 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

A) Variable costing net operating income exceeds super-variable costing net operating income by $124,000.
B) Super-variable costing net operating income exceeds variable costing net operating income by $124,000.
C) Variable costing net operating income exceeds super-variable costing net operating income by $22,000.
D) Super-variable costing net operating income exceeds variable costing net operating income by $22,000.

Answer 3

C
Explanation: Ending inventory = Beginning inventory + Units produced − Units sold = 0 + 56,000 units − 54,000 units = 2,000 units
Direct labor cost deferred in (released from) inventory = Direct labor cost in ending inventory − Direct labor cost in beginning inventory = ($11 per unit × 2,000 units) − $0 = $22,000
Because inventory increased, direct labor cost is deferred in inventory under the variable costing system described above. This increases the net operating income under variable costing by $22,000 relative to the net operating income under super-variable costing.

Question 4

Leheny Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 55,000 units and sold 50,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses an absorption costing system that assigns $21 of direct labor cost and $58 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:

A) $580,000
B) $1,400,000
C) $1,005,000
D) $1,110,000

Question 5

Under super-variable costing, which of the following is treated as a period cost?

A) Choice A
B) Choice B
C) Choice C
D) Choice D

Question 6

Union Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 24,000 units and sold 17,000 units. The company's only product is sold for $232 per unit.
Assume that the company uses an absorption costing system that assigns $22 of direct labor cost and $68 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:

A) $(102,000)
B) $374,000
C) $(830,000)
D) $(256,000)

Question 7

Michelman Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 34,000 units and sold 31,000 units. The company's only product is sold for $254 per unit.
The company is considering using either super-variable costing or an absorption costing system that assigns $28 of direct labor cost and $75 of fixed manufacturing overhead to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

A) Absorption costing net operating income exceeds super-variable costing net operating income by $309,000.
B) Absorption costing net operating income exceeds super-variable costing net operating income by $225,000.
C) Super-variable costing net operating income exceeds absorption costing net operating income by $309,000.
D) Super-variable costing net operating income exceeds absorption costing net operating income by $225,000.

Question 8

Buckbee Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 37,000 units and sold 32,000 units. The company's only product is sold for $261 per unit.
Assume that the company uses a variable costing system that assigns $17 of direct labor cost to each unit that is produced. The net operating income under this costing system is:

A) $1,184,000
B) $229,000
C) $714,000
D) $799,000

Question 9

Leheny Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 55,000 units and sold 50,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses a variable costing system that assigns $21 of direct labor cost to each unit that is produced. The net operating income under this costing system is:

A) $1,400,000
B) $1,005,000
C) $1,110,000
D) $580,000

Question 10

Souffront Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $97 per unit. The annual fixed costs were $1,416,000 of direct labor cost, $3,776,000 of fixed manufacturing overhead expense, and $1,650,000 of fixed selling and administrative expense. The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 59,000 units and sold 55,000 units. The company's only product is sold for $251 per unit. The net operating income for the year under super-variable costing is:

A) $1,628,000
B) $1,724,000
C) $1,240,000
D) $1,980,000

Question 11

Union Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 24,000 units and sold 17,000 units. The company's only product is sold for $232 per unit.
The net operating income for the year under super-variable costing is:

A) $(256,000)
B) $(830,000)
C) $(102,000)
D) $374,000

Question 12

Super-variable costing is most appropriate where:

A) direct labor is a fixed cost.
B) it is easy to accurately separate the variable and fixed components of manufacturing overhead.
C) direct labor is a variable cost.
D) manufacturing overhead consists entirely of variable cost.

Question 13

Buckbee Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 37,000 units and sold 32,000 units. The company's only product is sold for $261 per unit.
The unit product cost under super-variable costing is:

A) $97 per unit
B) $191 per unit
C) $224 per unit
D) $114 per unit

Question 14

Paparelli Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 40,000 units and sold 33,000 units. The company's only product is sold for $240 per unit.
The net operating income for the year under super-variable costing is:

A) $308,000
B) $(252,000)
C) $924,000
D) $448,000

Question 15

All differences between super-variable costing and variable costing net operating income are explained by the accounting for manufacturing overhead costs.

Question 16

Grandin Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 44,000 units and sold 41,000 units. The company's only product is sold for $242 per unit.
The company is considering using either super-variable costing or a variable costing system that assigns $24 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

A) Super-variable costing net operating income exceeds variable costing net operating income by $72,000.
B) Variable costing net operating income exceeds super-variable costing net operating income by $156,000.
C) Super-variable costing net operating income exceeds variable costing net operating income by $156,000.
D) Variable costing net operating income exceeds super-variable costing net operating income by $72,000.

Question 17

Buckbee Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 37,000 units and sold 32,000 units. The company's only product is sold for $261 per unit.
The net operating income for the year under super-variable costing is:

A) $799,000
B) $229,000
C) $714,000
D) $1,184,000

Question 18

Leheny Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 55,000 units and sold 50,000 units. The company's only product is sold for $238 per unit.
The net operating income for the year under super-variable costing is:

A) $1,400,000
B) $1,110,000
C) $1,005,000
D) $580,000

Question 19

The super-variable costing net operating income period can be computed by multiplying the number of units sold by the gross margin per unit.

Question 20

Letcher Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 56,000 units and sold 54,000 units. The company's only product is sold for $227 per unit.
The net operating income for the year under super-variable costing is:

A) $1,604,000
B) $1,404,000
C) $1,582,000
D) $1,728,000

Question 21

Dallavalle Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 32,000 units and sold 31,000 units. The company's only product is sold for $238 per unit.
The company is considering using either super-variable costing or a variable costing system that assigns $10 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

A) Variable costing net operating income exceeds super-variable costing net operating income by $10,000.
B) Super-variable costing net operating income exceeds variable costing net operating income by $10,000.
C) Super-variable costing net operating income exceeds variable costing net operating income by $67,000.
D) Variable costing net operating income exceeds super-variable costing net operating income by $67,000.

Question 22

Stubenrauch Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 38,000 units and sold 32,000 units. The company's only product is sold for $240 per unit.
Assume that the company uses a variable costing system that assigns $14 of direct labor cost to each unit that is produced. The net operating income under this costing system is:

A) $282,000
B) $912,000
C) $1,248,000
D) $828,000

Question 23

Dallavalle Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 32,000 units and sold 31,000 units. The company's only product is sold for $238 per unit.
The company is considering using either super-variable costing or an absorption costing system that assigns $10 of direct labor cost and $67 of fixed manufacturing overhead to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

A) Super-variable costing net operating income exceeds absorption costing net operating income by $1,000.
B) Super-variable costing net operating income exceeds absorption costing net operating income by $77,000.
C) Absorption costing net operating income exceeds super-variable costing net operating income by $77,000.
D) Absorption costing net operating income exceeds super-variable costing net operating income by $1,000.

Question 24

Labadie Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 25,000 units and sold 22,000 units. The company's only product is sold for $251 per unit.
The unit product cost under super-variable costing is:

A) $117 per unit
B) $215 per unit
C) $94 per unit
D) $181 per unit

Question 25

Labadie Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 25,000 units and sold 22,000 units. The company's only product is sold for $251 per unit.
Assume that the company uses a variable costing system that assigns $23 of direct labor cost to each unit that is produced. The unit product cost under this costing system is:

A) $181 per unit
B) $117 per unit
C) $94 per unit
D) $215 per unit

Question 26

Letcher Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 56,000 units and sold 54,000 units. The company's only product is sold for $227 per unit.
The company is considering using either super-variable costing or an absorption costing system that assigns $11 of direct labor cost and $62 of fixed manufacturing overhead to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

A) Super-variable costing net operating income exceeds absorption costing net operating income by $146,000.
B) Absorption costing net operating income exceeds super-variable costing net operating income by $124,000.
C) Super-variable costing net operating income exceeds absorption costing net operating income by $124,000.
D) Absorption costing net operating income exceeds super-variable costing net operating income by $146,000.

Question 27

Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit.
Assume that the company uses an absorption costing system that assigns $11 of direct labor cost and $75 of fixed manufacturing overhead to each unit that is produced. The net operating income under this costing system is:

A) $315,000
B) $1,035,000
C) $735,000
D) $691,000

Question 28

Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit.
The net operating income for the year under super-variable costing is:

A) $735,000
B) $1,035,000
C) $691,000
D) $315,000

Question 29

Marcelin Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 51,000 units and sold 46,000 units. The company's only product is sold for $276 per unit.
The company is considering using either super-variable costing or a variable costing system that assigns $22 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

A) Variable costing net operating income exceeds super-variable costing net operating income by $110,000.
B) Super-variable costing net operating income exceeds variable costing net operating income by $385,000.
C) Super-variable costing net operating income exceeds variable costing net operating income by $110,000.
D) Variable costing net operating income exceeds super-variable costing net operating income by $385,000.

Question 30

Marcelin Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 51,000 units and sold 46,000 units. The company's only product is sold for $276 per unit.
The net operating income for the year under super-variable costing is:

A) $1,593,000
B) $1,023,000
C) $1,978,000
D) $1,483,000

Question 31

Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit.
The unit product cost under super-variable costing is:

A) $180 per unit
B) $105 per unit
C) $94 per unit
D) $210 per unit

Question 32

Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit.
Assume that the company uses a variable costing system that assigns $11 of direct labor cost to each unit that is produced. The unit product cost under this costing system is:

A) $105 per unit
B) $180 per unit
C) $94 per unit
D) $210 per unit

Question 33

Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit.
Assume that the company uses a variable costing system that assigns $11 of direct labor cost to each unit that is produced. The net operating income under this costing system is:

A) $1,035,000
B) $691,000
C) $315,000
D) $735,000

Question 34

Stubenrauch Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 38,000 units and sold 32,000 units. The company's only product is sold for $240 per unit.
The net operating income for the year under super-variable costing is:

A) $912,000
B) $1,248,000
C) $282,000
D) $828,000

Question 35

Dallavalle Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 32,000 units and sold 31,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses a variable costing system that assigns $10 of direct labor cost to each unit that is produced. The unit product cost under this costing system is:

A) $170 per unit
B) $214 per unit
C) $93 per unit
D) $103 per unit

Question 36

Dallavalle Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 32,000 units and sold 31,000 units. The company's only product is sold for $238 per unit.
The unit product cost under super-variable costing is:

A) $214 per unit
B) $93 per unit
C) $170 per unit
D) $103 per unit

Question 37

Marcelin Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 51,000 units and sold 46,000 units. The company's only product is sold for $276 per unit.
The unit product cost under super-variable costing is:

A) $191 per unit
B) $233 per unit
C) $114 per unit
D) $92 per unit

Question 38

Tremble Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 49,000 units and sold 45,000 units. The company's only product is sold for $233 per unit.
Assume that the company uses an absorption costing system that assigns $11 of direct labor cost and $75 of fixed manufacturing overhead to each unit that is produced. The unit product cost under this costing system is:

A) $94 per unit
B) $180 per unit
C) $105 per unit
D) $210 per unit

Question 39

Dallavalle Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 32,000 units and sold 31,000 units. The company's only product is sold for $238 per unit.
Assume that the company uses an absorption costing system that assigns $10 of direct labor cost and $67 of fixed manufacturing overhead to each unit that is produced. The unit product cost under this costing system is:

A) $103 per unit
B) $214 per unit
C) $170 per unit
D) $93 per unit

Question 40

Labadie Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 25,000 units and sold 22,000 units. The company's only product is sold for $251 per unit.
The company is considering using either super-variable costing or a variable costing system that assigns $23 of direct labor cost to each unit that is produced. Which of the following statements is true regarding the net operating income in the first year?

A) Super-variable costing net operating income exceeds variable costing net operating income by $69,000.
B) Variable costing net operating income exceeds super-variable costing net operating income by $69,000.
C) Super-variable costing net operating income exceeds variable costing net operating income by $192,000.
D) Variable costing net operating income exceeds super-variable costing net operating income by $192,000.

Question 41

Drucker Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $84 per unit. The annual fixed costs were $288,000 of direct labor cost, $1,728,000 of fixed manufacturing overhead expense, and $782,000 of fixed selling and administrative expense. The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 24,000 units and sold 17,000 units. The company's only product is sold for $249 per unit.
Required:
a. Assume the company uses super-variable costing. Compute the unit product cost for the year.
b. Assume the company uses super-variable costing. Prepare an income statement for the year.

Question 42

Valcarcel Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 31,000 units and sold 25,000 units. The company's only product is sold for $233 per unit.
Required:
a. Assume the company uses super-variable costing. Compute the unit product cost for the year and prepare an income statement for the year.
b. Assume that the company uses a variable costing system that assigns $13 of direct labor cost to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.
c. Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net incomes.

Question 43

Sawicki Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 25,000 units and sold 18,000 units. The company's only product is sold for $224 per unit.
Required:
a. Assume the company uses super-variable costing. Compute the unit product cost for the year and prepare an income statement for the year.
b. Assume that the company uses an absorption costing system that assigns $10 of direct labor cost and $62 of fixed manufacturing overhead to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.

Question 44

Woodall Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 46,000 units and sold 44,000 units. The company's only product is sold for $235 per unit.
Required:
a. Assume the company uses super-variable costing. Compute the unit product cost for the year and prepare an income statement for the year.
b. Assume that the company uses a variable costing system that assigns $14 of direct labor cost to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.
c. Assume that the company uses an absorption costing system that assigns $14 of direct labor cost and $56 of fixed manufacturing overhead to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.
d. Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net incomes.
e. Prepare a reconciliation that explains the difference between the super-variable costing and absorption costing net incomes.

Question 45

Schubert Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $86 per unit. The annual fixed costs were $510,000 of direct labor cost, $2,210,000 of fixed manufacturing overhead expense, and $1,209,000 of fixed selling and administrative expense. The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 34,000 units and sold 31,000 units. The company's only product is sold for $232 per unit.
Required:
a. Assume the company uses super-variable costing. Compute the unit product cost for the year and prepare an income statement for the year.
b. Assume that the company uses a variable costing system that assigns $15 of direct labor cost to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.

Question 46

Dattilio Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 54,000 units and sold 49,000 units. The company's only product is sold for $238 per unit.
Required:
a. Assume the company uses super-variable costing. Compute the unit product cost for the year.
b. Assume the company uses super-variable costing. Prepare an income statement for the year.

Question 47

Guillaume Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 46,000 units and sold 41,000 units. The company's only product is sold for $260 per unit.
Required:
a. Assume the company uses super-variable costing. Compute the unit product cost for the year and prepare an income statement for the year.
b. Assume that the company uses a variable costing system that assigns $28 of direct labor cost to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.

Question 48

Nurre Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $88 per unit. The annual fixed costs were $729,000 of direct labor cost, $1,917,000 of fixed manufacturing overhead expense, and $814,000 of fixed selling and administrative expense. The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 27,000 units and sold 22,000 units. The company's only product is sold for $247 per unit.
Required:
a. Assume the company uses super-variable costing. Compute the unit product cost for the year and prepare an income statement for the year.
b. Assume that the company uses an absorption costing system that assigns $27 of direct labor cost and $71 of fixed manufacturing overhead to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.

Question 49

Shelko Corporation manufactures and sells one product. The following information pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 42,000 units and sold 37,000 units. The company's only product is sold for $272 per unit.
Required:
a. Assume the company uses super-variable costing. Compute the unit product cost for the year and prepare an income statement for the year.
b. Assume that the company uses an absorption costing system that assigns $28 of direct labor cost and $70 of fixed manufacturing overhead to each unit that is produced. Compute the unit product cost for the year and prepare an income statement for the year.
c. Prepare a reconciliation that explains the difference between the super-variable costing and absorption costing net incomes.