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QUESTION

Lee Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

4. Lee Corporation, which has only one product, has provided the following data concerning its most

recent month of operations:

Selling price

$95

Units in beginning inventory

100

Units produced

6,200

Units sold

5,900

Units in ending inventory

400

Variable costs per unit:

Direct materials

$42

Direct labor

$28

Variable manufacturing overhead

$1

Variable selling and administrative

$5

Fixed costs:

Fixed manufacturing overhead

$62,000

Fixed selling and administrative

$35,400

The company produces the same number of units every month, although the sales in units vary from

month to month. The company's variable costs per unit and total fixed costs have been constant from

month to month. Assume direct labor is a variable cost.

Required:

a. What is the unit product cost for the month under variable costing?

b. What is the unit product cost for the month under absorption costing?

c. Prepare contribution format income statement for the month using variable costing.

d. Prepare income statement for the month using absorption costing.

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