UHF Antennas,Inc

question 102

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:
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:

Indirect Materials

Supplies or materials used in the production process but not directly incorporated into the final product, such as lubricants, cleaning supplies, and office materials.

MRO

Maintenance, Repair, and Overhaul, referring to the sustaining activities to keep aircraft, vehicles, systems, and equipment operational and in good condition.

Domain Tasting

Domain tasting involves registering a domain to test its profitability and traffic before making a long-term commitment.

Cybersquatting

The practice of registering names, especially well-known company or brand names, as Internet domains, in the hope of reselling them at a profit.