The EG Company Produces and Sells One Product: a Microwave

question 18

Essay

The EG Company produces and sells one product: a microwave oven.The following data refer to the year just completed:
$\begin{array}{|l|r|}\hline \text { Beginning inventory } & \$ 0 \\\hline \text { Units produced } & 25,000 \\\hline \text { Units sold } & 20,000 \\\hline \text { Sales price per unit } & \$ 400 \\\hline \text { Selling and administrative expenses: } & \\\hline \text { Variable per unit } & \$ 15 \\\hline \text { Fixed (total) } & \$ 275,000\\\hline \text { Manufacturing costs: } & \\\hline \text { Direct materials cost per unit } & \$ 200 \\\hline \text { Direct labour cost per unit } & \$ 50 \\\hline \text { Variable overhead cost per unit } & \$ 30 \\\hline \text { Fixed overhead (total) } & \$ 300,000\\\hline\end{array}$

Assume that direct labour is a variable cost.
Required:
a)Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.
b)Prepare an income statement for the year using absorption costing.
c)Prepare an income statement for the year using variable costing.
d)Reconcile the absorption costing and variable costing operating income figures in b)and c)above.

Appreciate the significance of diversity in contemporary business strategies.

Understand common political strategies used in decision-making processes to prevent stalemate decisions.

Grasp the significance of learning from mistakes through forgiveness and remembrance.

Identify perceptual, emotional, and cultural blocks to creative decision making.

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Definitions:

Warranty

A guarantee given to the purchaser of an item by the seller, promising repair or replacement in case of defects within a certain period of time.

Codicil

A supplement or addition made to alter, explain, or otherwise modify a will, without revoking it entirely.

Working Sprinkler System

A fully operational fire suppression system installed in buildings that activates automatically in response to detectable signs of fire, such as heat or smoke.

Homeowner's Insurance Policy

An insurance plan that provides coverage for damage or loss to a homeowner's property and assets.