Question

During 20XX Artic Company completed its first year of operations: Below are selected data:



Chapter 21 Homework Question 1: (1.0 point) Required: Using the variable costing approach, calculate the unit product cost. When entering the answers in Blackboard omit $ signs.

Chapter 21 Homework Question 2: (1.0 point) Required: Using the variable costing approach, calculate the Income from operations. When entering the answers in Blackboard omit $ signs.

Chapter 21 Homework Question 3: (1.0 point) Required: Using the absorption costing approach, calculate the unit product cost. When entering the answers in Blackboard omit $ signs.

Chapter 21 Homework Question 4: (1.0 point) Required: Using the absorption costing approach, calculate the Income from operations. When entering the answers in Blackboard omit $ signs.










Sales (12,000 units) $144,000 Production costs (15,000 units): Direct materials $12,000 Direct labor 24,000 Variable factory overhead 28,500 Fixed factory overhead 30,000 Total production costs 94,500 Operating expenses: Variable operating expenses $15,000 Fixed operating expenses 20,000 Total operating expenses 35,000

Answer 1

Q1) Calculation of unit product cost using variable costing approach.

Given,  Total production costs = $ 94,500

Less: Fixed factory ovhd = $ (30,000)  

Revised production costs = $ 64,500

Given no. of units = 15,000 units

Therefore Unit product cost = 64500/15000

=$ 4.3 per unit

Q2) Calculation of Income from operations using variable costing approach

a) Valuation of closing stock:

No. of units = 3000 units ( 15000-12000)

Unit cost = $ 4.3 per unit

therefore closing stock = 3000 units x $ 4.3 per unit = $12,900

INCOME FROM OPERATIONS

Sales                           =                      144000

Add: Closing stock                 =                      12900

Less: Total production cost    =                      (94500)

Total operating expenses =             (35000)

Income from operations             =            27400  

Q3) Calculation of unit product cost using absorption costing approach

Given,  Total production costs = $ 94,500

Given no. of units = 15,000 units

Therefore Unit product cost = 94500/15000

=$ 6.3 per unit

Q4) Calculation of Income from operations using absorption costing approach

a) Valuation of closing stock:

No. of units = 3000 units ( 15000-12000)

Unit cost = $ 6.3 per unit

therefore closing stock = 3000 units x $ 6.3 per unit = $18,900

INCOME FROM OPERATIONS

Sales                           =                      144000

Add: Closing stock                 =                   18900

Less: Total production cost    =                   (94500)

Total operating expenses =            (35000)

Income from operations             =         33400