Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month with the following unit costs: Direct materials $5.00
Direct labor 3.00
Variable overhead 1.50
Fixed overhead 7.00
Variable marketing cost 1.20
Fixed overhead per unit 1.20
Total fixed factory overhead is $280,000 per month. During October, 38,400 units were sold at a price of $24, and fixed marketing and administrative expenses were $130,500.
Required:
1. Calculate the cost of each unit using absorption costing.
2. How many units remain in ending inventory? What is the cost of ending inventory using absorption costing?
3. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October.

Following are the responses to the given question:

Explanation:

For question 1:

Calculating the cost per unit:

For question 2:

Calculating the ending inventory units:

Calculating the cost for the Ending inventory:

For question 3:

Calculating the absorption costing for the income statement:

Particular                                             Amount

Sales

-COGS

Gross profit                                          

Cost of variable marketing  

marketing and administrative costs are fixed

Net income                                            

a and c

explanation:

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total