During its second month of operations, MLS Corporation produced 300 units and sold 280 units at $40 each. The beginning inventory comprised 50 units, and costs were unchanged from the previous month. MLS uses a FIFO cost flow assumption to account for inventory. Costs incurred during the second month were:
Direct materials per unit produced $3
Direct labour per unit produced $5
Variable overhead per unit produced $7
Variable selling and administrative cost per unit sold $5
Total fixed production overhead $6,000
Total fixed selling and administrative costs $3,000
a)Reconcile MLS' income based on absorption costing and variable costing.
b)Reconcile MLS' income based on variable costing and throughput costing.

Question

Quizplus · Accepted Answer

The Answer of During its second month of operations, MLS Corporation produced 300 units and sold 280 units at $40 each. The beginning inventory comprised 50 units, and costs were unchanged from the previous month. MLS uses a FIFO cost flow assumption to account for inventory. Costs incurred during the second month were:
Direct materials per unit produced $3
Direct labour per unit produced $5
Variable overhead per unit produced $7
Variable selling and administrative cost per unit sold $5
Total fixed production overhead $6,000
Total fixed selling and administrative costs $3,000
a)Reconcile MLS' income based on absorption costing and variable costing.
b)Reconcile MLS' income based on variable costing and throughput costing.

During Its Second Month of Operations, MLS Corporation Produced 300