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28 Aug
2019

new division to manufacture and sell | Good Grade Guarantee!

Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables, using select hardwoods. The division’s monthly costs are shown in the schedule below: Manufacturing costs: Variable costs per unit: Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $152 Variable manufacturing overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10 Fixed manufacturing overhead costs (total). . . . . . . . . . . . . . . . . . . . . . $340,000 Selling and administrative costs: Variable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15% of sales Fixed (total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 160,000 Zurgot regards all of its workers as full-time employees, and the company has a long- standing no-layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labour costs in its fixed manufacturing overhead. The tables sell for $400 each. During the first month of operations, the following activity was recorded: Units produced . . . . . . . . . . . . . . . . . . 4,000 Units sold. . . . . . . . . . . . . . . . . . . . . . . . 3,200 Required: 1. Compute the unit product cost under a. Absorption costing. b. Variable costing. 2. Prepare an income statement for the month using abs

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