Bus 630 Week 3 Dq 1 Fixed Labor

BUS 630 Week 3 DQ 1 Fixed Labor

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Far North Telecom, Ltd., of Ontario, has organized a new division to manufacture and sell specialty cellular telephones.   The division’s monthly costs are shown in the table below.   Far North Telecom regards all of its workers as full-time employees and the company has a long-standing no layoff policy.   Furthermore, production is highly automated.   Accordingly, the company includes its labor costs in its fixed manufacturing overhead.   The cellular phones sell for $150 each.   During September, the first month of operations, the following activity was recorded: 12,000 units produced, 10,000 units sold.   Comment on the five questions below the table.   Respond to at least two of your fellow students’ postings.
Manufacturing costs:
Variable costs per unit:
Direct Materials $48
Variable manufacturing overhead $2
Fixed manufacturing overhead costs (total) $360,000
Selling and administration costs:
Variable 12% of sales
Fixed (total) $470,000
a.   Compute the unit product cost under:
        i.   absorption costing
        ii.   variable costing
b.   Prepare an absorption costing income statement for September
c.   Prepare a contribution format income statement for September using variable costing.
d.   Assume that the company must obtain additional financing in order to continue operations.   As a member of top management, would you prefer to rely n the statement in (b) above or in (3) above when meeting with a group of prospective investors?
e.   Reconcile the absorption costing and variable costing net operating incomes in (2) and (3) above.

Complete the following exercise (Research and Application 7-20) and submit to your instructor.
The questions in this exercise are based on JetBlue Airways Corporation.   To answer the...