module 5

Option #1: Cost of Production

Paint More, LLC, has organized a new division to manufacture and sell specialty paint.  The division’s monthly costs are shown below:

Because the production is highly automated, the company includes its labor costs in its fixed manufacturing overhead.  The gallons of paint sell for $68 each.  During September, the first month of operations, the following activity was recorded:

Units produced 5,000
Units sold 4,000

Instructions:

Submit an Excel document with each tab labeled by item number that demonstrates the following:

1. Compute the unit product cost under:
   1. Absorption costing
   2. Variable costing
2. Prepare an absorption costing income statement for September
3. Prepare a contribution format income statement for September using variable costing

Provide your answers in a clearly organized Excel spreadsheet. Check spelling and formatting for readability. Document your sources. Where applicable, written comments must be in accordance with the CSU-Global Guide to Writing and APA Requirements. Be sure to review the Module 5 Critical Thinking grading rubric, which may be accessed through the Course Information page.