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UHF Antennas, Inc._Absorption and Variable costing

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UHF Antennas, Inc., produces and sells a unique television antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been reported for the first month of the new plant's operation;Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month. Assume that direct labor is a variable cost.;Required;a. Assuming that the company uses absorption costing, compute the unit product cost and prepare an income statement.;b. Assuming that the company uses variable costing, compute the unit product cost and prepare an income statement.;c. Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported net operating income.

 

Paper#75939 | Written in 18-Jul-2015

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