Capello Corporation Manufactures and Sells One Product

question 42

Essay

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:

Advantage

A condition or circumstance that puts someone or something in a favorable or superior position.

Career Ladders

Structured paths for career progression within an organization, often represented by an upward series of jobs or roles that offer increasing responsibility and rewards.

Training Opportunities

Programs or initiatives designed to enhance the skills and knowledge of individuals, typically offered by employers or educational institutions.

Mutual Adjustment

A process of coordination between parties or groups that is based on informal communication and spontaneous problem-solving.