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

question 139

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:
$$\begin{array} { | l | r | } \hline \text { January 2019 } & \\\hline \text { Units produced and sold: } & 1,200 \\\hline \text { Sales in units } & 1,400 \\\hline \text { Production in units } & \$ 4 \\\hline \text { Sariable manufacturing cost per harmonica } & \$ 1 \\\hline \text { Total fixed manufacturing overhead } & \$ 2,800 \\\hline \text { Total fixed selling and administrative costs } & \$ 2,100 \\\hline\end{array}$$ 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:

Location Decision

The process of selecting a geographical site for a company's operations, facilities, or services.

Capital Flow

The movement of money for the purpose of investment, trade, or business production internationally or within a country.

Memphis

A city located in the southwestern part of Tennessee, USA, known for its rich cultural history, especially in music, and as the home of Elvis Presley's Graceland.

FedEx

A multinational delivery services company known for its overnight shipping service and pioneering a system that could track packages and provide real-time updates on package location.