Fowler Corporation Manufactures a Single Product

question 105

Essay

Fowler Corporation manufactures a single product. Operating data for the company and its absorption costing income statements for the last two years are presented below:
Variable manufacturing costs are $6 per unit. Fixed manufacturing overhead totals $72,000 in each year. This fixed manufacturing overhead is applied at the rate of $4 per unit. Variable selling and administrative expenses are $2 per unit sold.Required:a. Compute the unit product cost in each year under variable costing.b. Prepare new income statements for each year using variable costing.c. Reconcile the absorption costing and variable costing net operating income for each year.

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Definitions:

3-Sigma

A rule or principle in statistics indicating that nearly all values lie within three standard deviations of the mean in a normal distribution.

R Chart

R Chart, or range chart, is a type of control chart used in statistical process control to monitor the variability of a process based on samples taken from the process at given times.

Process Spread

Process spread refers to the variability within a process, often measured to assess the consistency of output over time.

Monitor

To regularly observe or check something over a period of time for the purpose of keeping track of its state or progress.