Mahugh Company,which Has Only One Product,has Provided the Following Data

question 52

Essay

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

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 an income statement for the month using the contribution format and the variable costing method.
d) Prepare an income statement for the month using the absorption costing method.
e) Reconcile the variable costing and absorption costing operating incomes for the month.

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Definitions:

Unemployment Tax

A tax paid by employers based on the total payroll and the unemployment claims filed by former employees, financing unemployment benefit programs.

Federal Income Tax

A tax levied by the United States federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Federal Form 941

A quarterly tax form used by employers to report federal withholdings from employees.

Medicare

Medicare is a federal health insurance program in the United States primarily for people who are 65 years or older, and for some younger people with disabilities.