(Appendix 5A)Capello Corporation Manufactures and Sells One Product

question 42

Essay

(Appendix 5A)Capello Corporation manufactures and sells one product.In the company's first year of operations, the variable cost consisted solely of direct materials of $93 per unit.The annual fixed costs were $675, 000 of direct labor cost, $1, 701, 000 of fixed manufacturing overhead expense, and $780, 000 of fixed selling and administrative expense.The company does not have any variable manufacturing overhead costs or variable selling and administrative costs.During its first year of operations, the company produced 27, 000 units and sold 20, 000 units.The company's only product is sold for $258 per unit.
Required:
a.Assume the company uses super-variable costing.Compute the unit product cost for the year and prepare an income statement for the year.
b.Assume that the company uses an absorption costing system that assigns $25 of direct labor cost and $63 of fixed manufacturing overhead to each unit that is produced.Compute the unit product cost for the year and prepare an income statement for the year.

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Definitions:

Axon Hillock

The axon hillock is the part of a neuron that connects the cell body to the axon, playing a crucial role in the initiation of nerve impulses.

Magnitude

Magnitude typically refers to the size, extent, or dimension of an object or phenomenon, often quantified in terms of numerical values in various scientific fields.

Threshold Potential

Voltage on a neural membrane at which an action potential is triggered by the opening of sodium and potassium voltage-activated channels; about –50 mV relative to extracellular surround. Also called threshold limit.

Neural Membrane

The lipid bilayer that encloses the cytoplasm of a neuron, essential for transmitting neural signals.