Question

Dance Creations manufactures authentic Hawaiian hul skirts that are purchased for traditional Hawaiian celebrations, costume parties, and other functions. During its first year of business, the company incurred the following costs: Variable Cost per Hula Skirt 10.05 Variable manutduring overhead Variable selling and administrative expenses Ford Cooper Month Food manufacturing overhead Fixed selling and ad o tive expenses $18,000 Dance Creations charges 533 for each skin that sells. During the first month of Operation, made 1.600 skirts and sold 1465. Required: 1. Assuming Dance Creations uses variable costing, calculate the variable manufacturing cost per unit for last month (Round your answer to 2 decimal places) lo Variable Costne

Answer 1

	Working Notes : 1
	Unit Produced =	$                          1,600	Units
	Unit Sold =	$                          1,465	Units
	Closing Stock	$                             135	Units
	Selling Price Per unit	$                          33.00	Per Units
	Sales Value	$                       48,345
	Variable Selling Expenses p.U	$                            0.30	Per Units
	SOLUTION FOR 1 & 3
	CALCUALTION OF cost of production units by using absorption and variable Costing
	Particulars	Absorption Costing Amount	Variable Costing Amount
	Direct Material Per unit	$                          10.05	$                          10.05
	Direct Labour Per Unit	$                            3.85	$                            3.85
	Vairable Manufacturing Overhead	$                            1.50	$                            1.50
	Fixed Manufacturing Overhead ($ 18,000 / 1600 Units)	$                          11.25	$                                 -
	Cost of Production per unit	$                          26.65	$                          15.40
	SOLUTION 2)
	VARIABLE COSTING INCOME STATEMENTS	Variable Costing
	Particulars	Amount
	Sales	$                 48,345.00
	Cost of Goods Sold
	Beginning inventory	$                                 -
	Cost of Goods Manufactured (1600 Units X $ 15.40 Per unit)	$                 24,640.00
	Less: Ending Inventory (135 units $ 15.40 Per Unit)	$                    2,079.00
	Cost of Goods Sold	$                 22,561.00
	Variable Selling Expenses (1465 x $ 0.30)	$                       439.50
	Gross Profit	$                 25,344.50
	Less: Fixed Manufacturing overhead	$                 18,000.00
	Less : Fixed Selling Expenses	$                    5,400.00
	Net Income	$                    1,944.50
	SOLUTION 4)
	ABOSRPTION COSTING INCOME STATEMENTS	Absorption Costing
	Particulars	Amount
	Sales	$                 48,345.00
	Cost of Goods Sold
	Beginning inventory	$                                 -
	Cost of Goods Manufactured (1600 Units X $ 26.65 Per unit)	$                 42,640.00
	Less: Ending Inventory (135 units $ 26.65 Per Unit)	$                    3,597.75
	Cost of Goods Sold	$                 39,042.25
	Gross Profit	$                    9,302.75
	Less : Selling Expenses
	Variable Selling Expenses	$                       439.50
	Fixed Selling expenses	$                    5,400.00
	Net Income	$                    3,463.25
	SOLUTION 5)
	Answer = Variable Costing will show more profit