Zola Company manufactures and sells one product. The following information pertains to the company’s first year of operations:

Zola Company manufactures and sells one product. The following information pertains to the company’s first year of operations:

Variable cost per unit:
Direct materials	$	17
Fixed costs per year:
Direct labor	$	264,000
Fixed manufacturing overhead	$	290,000
Fixed selling and administrative expenses	$	85,000

The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Zola produced 22,000 units and sold 17,600 units. The selling price of the company’s product is $64.60 per unit.

Required:

1. Assume the company uses super-variable costing:

a. Compute the unit product cost for the year.

b. Prepare an income statement for the year.

 

Explanation

1.

a.

The unit product cost under super-variable costing would include direct materials of $17.

1.

b.

Sales (17,600 units × $64.60 per unit) = $1,136,960

Variable cost of goods sold (17,600 units × $17 per unit) = $299,200

Thanks