Accounting for Decision Making and Control 6th Edition by Jerold Zimmerman

Exercise 10

The Mopart Division produces a single product. Its standard cost system uses a flexible budget to assign indirect costs on the basis of standard direct labor hours. At the budgeted volume of 4,000 direct labor hours, the standard cost per unit is as follows:

For the month of March, the following actual data were reported:

There was no beginning inventory.
Required:
a. Analyze the results of operations for March. Support your analysis.
b. Present two income statements in good format using absorption costing and variable costing net income.
c. Reconcile any difference in net income between the two statements.
d. What is the opportunity cost of the unused normal capacity