module 5
Option #1: Cost of Production
Paint More, LLC, has organized a new division to manufacture and sell specialty paint. The division’s monthly costs are shown below:
| Manufacturing costs: | ||
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Variable costs per unit: |
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Direct materials |
$12 |
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Variable manufacturing overhead |
$1 |
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Fixed manufacturing overhead costs (total) |
$100,000 |
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Selling and administrative costs: |
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|
|
|
Variable |
7% of sales |
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Fixed (total) |
$31,000 |
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Because the production is highly automated, the company includes its labor costs in its fixed manufacturing overhead. The gallons of paint sell for $68 each. During September, the first month of operations, the following activity was recorded:
Units produced 5,000
Units sold 4,000
Instructions:
Submit an Excel document with each tab labeled by item number that demonstrates the following:
- Compute the unit product cost under:
- Absorption costing
- Variable costing
- Prepare an absorption costing income statement for September
- Prepare a contribution format income statement for September using variable costing
Provide your answers in a clearly organized Excel spreadsheet. Check spelling and formatting for readability. Document your sources. Where applicable, written comments must be in accordance with the CSU-Global Guide to Writing and APA Requirements. Be sure to review the Module 5 Critical Thinking grading rubric, which may be accessed through the Course Information page.
