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Product Cost is calculated using the formula given below Product Cost = Direct Material Cost + Direct Labor Cost + Manufacturing Overhead Cost Product Cost = $1,000,000 + $350,000 + $38,000 Product Cost = $1,388,000 May 11, 2014 · 1. Assume that the company uses absorption costing. a. Determine the unit product cost. b. Prepare an income statement for the month. 2. Assume that the company uses variable costing. a. Determine the unit product cost. b. Prepare a contribution format income statement for the month. 3.
Use the following information in answering Questions 17 - 18: During a recent accounting period a company produced 1,000 units of Item Q and 400 units of Item R. The standard direct labor is 4 hours for each unit of Item Q and 6 hours for each unit of Item R. The standard cost for one hour of direct labor is $20 per hour.
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(c) calculate the production cost of one unit of product A and one unit of product B under both the old and the new costing systems (d) comment on the difference between the production costs for each product under the old and the new costing systems Work to two decimal places (i.e. the nearest penny).