Dattilio Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: Variable cost per unit: Direct materials$80Fixed costs per year: Direct labor$1,404,000Fixed manufacturing overhead$3,402,000Fixed selling and administrative expenses$1,617,000 The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 54,000 units and sold 49,000 units. The company's only product is sold for $238 per unit.Required:a. Assume the company uses super-variable costing. Compute the unit product cost for the year.b. Assume the company uses super-variable costing. Prepare an income statement for the year.
What will be an ideal response?
a.
Under super-variable costing, the unit product cost is just the direct materials cost of $80 per unit.
b.
Super-variable costing income statement:
| Sales ($238 per unit × 49,000 units) | $ | 11,662,000 | ||||
| Variable cost of goods sold ($80 per unit × 49,000 units) | 3,920,000 | |||||
| Contribution margin | 7,742,000 | |||||
| Fixed expenses: | ||||||
| Direct labor | $ | 1,404,000 | ||||
| Fixed manufacturing costs | 3,402,000 | |||||
| Fixed selling and administrative expense | 1,617,000 | 6,423,000 | ||||
| Net operating income | $ | 1,319,000 | ||||
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