UHF Antennas,Inc Management Is Anxious to See How Profitable the New Antenna

question 41

Essay

UHF Antennas,Inc.,produces and sells a unique television antenna.The company has just opened a new plant to manufacture the antenna,and the following cost and revenue data have been reported for the first month of the new plant's operation:
$\begin{array}{|l|r|}\hline \text { Selling price } & \$ 108 \\\hline \text { Beginning inventory } & 0 \\\hline \text { Units produced } & 35,000 \\\hline \text { Units sold } & 30,000 \\\hline \text { Selling price per unit } & \$ 50\\ \hline\text { Selling and administrative expenses: } & \\\hline \text { Variable per unit } &\$2 \\\hline \text { Fixed (total) } &\$ 360,000 \\\hline \text { Manufacturing costs: }\\\hline \text { Manufacturing costs: } &\$ 9 \\\hline \text { Direct material cost per unit } & \$ 8 \\\hline \text { Direct labour cost per unit } & \$ 3\\\hline \text { Variable overhead cost per unit } & \$ 350,000 \\\hline\end{array}$

Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month.Assume that direct labour is a variable cost.
Required:
a)Assuming that the company uses absorption costing,compute the unit product cost and prepare an income statement.
b)Assuming that the company uses variable costing,compute the unit product cost and prepare an income statement.
c)Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported operating income.

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Definitions:

Quid Pro Quo Harassment

A form of sexual harassment where job benefits are conditioned on the submission to sexual advances or other conduct of a sexual nature.

Performance Review

A formal assessment of an employee's work performance, typically conducted on a regular basis.

Employment Discrimination

Unfair or unfavorable treatment of employees or job applicants based on race, color, religion, sex, national origin, age, disability, or any other characteristic protected by law.

Reinstatement

The process of restoring someone or something to their former position, status, or condition, often used in contexts such as employment or insurance policies.