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

question 49

Essay

(Appendix 5A)Mendoza Corporation manufactures and sells one product.The following information pertains to the company's first year of operations: 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 47, 000 units and sold 45, 000 units.The company's only product is sold for $275 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 a variable costing system that assigns $24 of direct labor cost to each unit that is produced.Compute the unit product cost for the year and prepare an income statement for the year.
c.Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net incomes.

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Definitions:

Amniocentesis

A medical procedure used in prenatal diagnosis of chromosomal abnormalities and fetal infections, involving the extraction of a small amount of amniotic fluid for testing.

Diagnostic X-ray

A medical imaging technique using X-rays to diagnose or monitor various conditions by creating images of structures inside the body.

Low-birth-weight

Describes babies born with a weight of less than 2,500 grams (5 pounds, 8 ounces), often associated with developmental and health challenges.

Enlarged Craniums

A condition characterized by the abnormal growth of the head or skull, often indicative of medical or genetic issues.