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  3. abc company incurs the following costs for its beverage mix...

Question: abc company incurs the following costs for its beverage mix...

Question details

ABC company incurs the following costs for its beverage mix in March 2019:

Direct material cost per case                                                          $6.00

Direct labour cost per case                                `                   $3.00

Variable manufacturing O/H cost per case                         $2.00

Sales commission per case                                                   $2.50

Total fixed manufacturing O/H expenses                         $50,000

Total fixed marketing and administrative expenses       $25,000

 

ABC company produced 10,000 cases of the mix as planned but sold only 8,000 cases @ $30 per case. There were no beginning inventories.

Required:

a) What is the company’s inventoriable (product) cost under Absorption costing and Variable costing method?    

b) Prepare an income statement for the company using Variable costing method.    

 

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