Far North Telecom, Ltd., of Ontario, has organized a new division to manufacture and sell specialty

 
   

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Far North Telecom, Ltd., of Ontario, has organized a new division to manufacture and sell specialty cellular telephones. The division's monthly costs are shown below: Manufacturing costs: Variable costs per unit: Direct materials Variable manufacturing overhead Fixed manufacturing overhead costs (total) Selling and administrative costs: Variable Fixed (total) $86 $6 $235,600 14% of sales $164,000 Far North Telecom regards all of its workers as full-time employees and the company has a long-standing no layoff policy. Furthermore, production is highly automated. Accordingly, the company Includes its labor costs In its fixed manufacturing overhead. The cellular phones sell for $290 each. During September, the first month of operations, the following activity was recorded: Units produced Units sold 3,800 3,000 Requirement 1: (a) Compute the unit product cost under Absorption costing. (Omit the “S” sign in your response.) Unit product cost (b) Compute the unit product cost under Variable costing. (Omit the “S” sign in your response.) Unit product cost Requirement 2: Prepare an absorption costing income statement for September. (Input all amounts as positive values. Omit the “S” sign in your response.) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) Requirement 3: Prepare a contribution format income statement for September using variable costing. (Input all amounts as positive values except net operating loss which should be indicated by a minus sign. Omit the “$” sign in your response.) (Click to select) Variable expenses: (Click to select) (Click to select) (Click to select) Fixed expenses: (Click to select) (Click to select) (Click to select) Requirement 4: Assume that the company must obtain additional financing in order to continue operations. As a member of top management, would you prefer to rely on the statement in (2) above or in (3) above when meeting with a group of prospective investors? O Absorption costing statement O Variable costing statement 10.00 points Requirement 5: Reconcile the absorption costing and variable costing net operating incomes in requirement 2 and 3 above. (Negative amount should be indicated by a minus sign. Omit the “S” sign in your response.) (Click to select) (Click to select) (Click to select) Fixed manufacturing overhead cost deferred 63