Louie's Music Produces Harmonicas That It Sells for $12 Each

question 95

Essay

Louie's Music produces harmonicas that it sells for $12 each.The company computes a new monthly fixed manufacturing overhead allocation rate based on the planned number of harmonicas to be produced that month.Assume all costs and production levels are exactly as planned.The following data are from Louie's Music's first month in business:
$$\begin{array} { | l | r | } \hline \textbf { January 2019} & \\\hline \text { Sales in uroduced and sold: } & 1,200\\\hline \text { Production in units } & 1,400\\\hline \text { Variable manufacturing cost per harmonica } & \$ 4 \\\hline \text { Sales commission cost per harmonica } & \$ 1 \\\hline \text { Total fixed manufacturing overhead } & \$ 2,800 \\\hline \text { Total fixed selling and administrative costs } & \$ 2,100 \\\hline\end{array}$$ Requirements
1.Compute the product cost per harmonica produced under absorption costing.
2.Prepare an income statement for January,2019

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Definitions:

Activities

Tasks or actions undertaken by individuals, usually referring to events involving movement, creativity, or social interaction.

Sales Contest

A competitive event designed to motivate sales personnel to increase their sales performance over a certain period.

Short-term Incentive

A reward system designed to motivate employees over a brief period, often meant to boost immediate performance or achieve specific short-term objectives.

Package Surprise

An unexpected benefit or gift included with a purchase, often used as a marketing strategy to enhance customer satisfaction and loyalty.