Critical Thinking: Cost of Production (50 points)
Paint More LLC has organized a new division to manufacture and sell specialty paint. The division’s monthly costs are shown below:
Variable costs per unit:
Direct materials
$12
Variable manufacturing overhead
$1
Fixed manufacturing overhead costs (total)
$100,000
Selling and administrative costs:
Variable
7% of sales
Fixed (total)
$31,000
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 Submit an Excel document which each tab labeled by item number that demonstrates the following:
1. Compute the unit product cost under:
a. Absorption costing
b. Variable costing
2. Prepare an absorption costing income statement for September
3. Prepare a contribution format income statement for September using variable costing
Provide your answers in an Excel spreadsheet, clearly organized. Check spelling and formatting for readability.
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