Problem II.
Loker Corp. makes and sells garden hoses in 50 ft. lengths. The following information is
available for the year just ended, the companyâs first year of operations:
Units produced: 8,000
Units sold: 6,000
Variable costs per unit:
Manufacturing (Direct Materials, Direct
Labor, and Variable Overhead) - $12.00 (total)
Selling and Admin. - $2.00
Selling price:$25.00 per unit
Total fixed costs:
Overhead - $7,200
Selling and Admin.- $5,000
REQUIRED (You can use abbreviations if you wish. Organize your answers in a readable way
using the columns and rows below.):
1.
2.
3.
4.
5.
Compute the cost of one unit of product using absorption costing.
Compute the cost of one unit of product using variable costing.
Prepare an income statement for the year in the proper format using absorption costing.
Prepare an income statement for the year in the proper format using variable costing.
Provide a quantitative explanation/reconciliation of why the two net income amounts that
you calculated above are different (or the same).
Unit Cost: Absorption
Unit Cost: Variable
Income Statement: Absorption
Income Statement: Variable
Reconciliation:
Comments (optional):