Paint More LLC has organized a new division to manufacture and sell specialty paint. The

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

Manufacturing costs:
Variable costs per unit:
	Direct materials	$12
	Variable manufacturing overhead	$1
Fixed manufacturing overhead costs (total)		$100,000
Selling and administrative costs:
	Variable	7% of sales
	Fixed (total)	$31,000

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

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

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