Louie's Music Produces Harmonicas That It Sells for $12 Each

Essay

Louie's Music produces harmonicas that it sells for $12 each. The company computes a new monthly fixed manufacturing overhead allocation rate based on the planned number of harmonicas to be produced that month. Assume all costs and production levels are exactly as planned. The following data are from Louie's Music's first month in business:
$$\begin{array} { | l | r | } \hline \text { Jnuary 2019 } & \\\hline \text { Units produced and sold: } & \\\hline \text { Sales in units } & 1,200 \\\hline \text { Production in units } &1,400\\\hline \text { Variable manufacturing cost per harmonica } & \$ 4 \\\hline \text { Sales commission cost per harmonica } & \$ 1 \\\hline \text { Total fixed manufacturing overhead } & \$ 2,800 \\\hline \text { Total fixed selling and administrative costs } &\$ 2,100\\\hline\end{array}$$ Requirements
1. Compute the product cost per harmonica produced under absorption costing.
2. Prepare an income statement for January, 2019