Prepare a 2012 income statement for Titus Company using variable costing.

Titus Company manufactures and distributes industrial air compressors. The following costs are available for the year ended December 31, 2012. The company has no beginning inventory. In 2012, 1,500 units were produced, but only 1,300 units were sold. The unit selling price was $4,500. Costs and expenses were:

Variable costs per unit

$ 1,000

Direct materials

1,500

Direct labor

300

Variable manufacturing overhead

70

Variable selling and administrative expenses

Annual fixed costs and expenses

Manufacturing overhead

$1,400,000

Selling and administrative expenses

100,000

Instructions

(a) Compute the manufacturing cost of one unit of product using variable costing.

(b) Prepare a 2012 income statement for Titus Company using variable costing.

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