Castaway Company Reports the Following First Year Production Cost Information

question 63

Essay

Castaway Company reports the following first year production cost information:
$\begin{array}{ll}\text { Units produced } & 53,000 \text { units } \\\text { Units sold } & 51,000 \text { units } \\\text { Sales price } & \$ 150 \text { per unit } \\\text { Direct labor } & \$ 8 \text { per unit } \\\text { Direct materials } & \$ 4 \text { per unit } \\\text { Variable overhead } & \$ 2,173,000 \text { in total } \\\text { Fixed overhead } & \$ 3,339,000 \text { in tota } \\\text { Operating expenses } & \$ 1,000,000 \text { in total }\end{array}$ a.Determine the net income using variable costing.
b.Determine the net income using absorption costing.

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Definitions:

Pre-tax Wages

Earnings of an individual before any taxes are deducted.

Unreimbursed Medical Expenses

Health-related costs that are not covered or compensated by insurance or other means.

Childcare

The care and supervision of a child or children, typically provided by someone other than the child's legal guardians.

Net Pay

The amount of money a worker takes home after deductions.