Ans. 1 a | In Absorption costing method, the unit product cost is the sum of all manufacturing costs per unit | |||
whether it is fixed or variable. | ||||
Unit product cost under Absorption Costing: | ||||
Direct materials | $11.00 | |||
Direct labor | $8.00 | |||
Variable Overhead per unit | $1.00 | |||
Fixed overhead per unit ($420,000 / 30,000) | $14.00 | |||
Product Cost per unit | $34.00 | |||
*Fixed overhead per unit = Fixed manufacturing overhead / Units produced | ||||
Ans. 1 b | Lynch Company | |||
Absorption Costing Income Statement | ||||
PARTICULARS | Amount | |||
Sales (25,000 * $54) | $1,350,000 | |||
Less: Cost of goods sold | ||||
Opening inventory | $0 | |||
Add: Cost of goods manufactured (30,000*$34) | $1,020,000 | |||
Cost of goods available for sale | $1,020,000 | |||
Less: Ending inventory [(30,000 - 25,000) * $34] | -$170,000 | |||
Cost of goods sold (total) | $850,000 | |||
Gross margin | $500,000 | |||
Selling & Administrative expenses: | ||||
Fixed | $330,000 | |||
Variable (25,000 * $1) | $25,000 | |||
Total Selling and administrative expenses | $355,000 | |||
Net operating income | $145,000 | |||
*Ending inventory = (Units produced - Units sold) * Production cost per unit | ||||
Ans. 2 A | In variable costing method, the unit product cost is the sum of only variable | |||
manufacturing costs per unit | ||||
Unit product cost under Variable Costing: | ||||
Direct materials | $11.00 | |||
Direct labor | $8.00 | |||
Variable Overhead per unit | $1.00 | |||
Total production cost per unit | $20.00 | |||
Ans. 2 b | COOL SKY | |||
Variable Costing Income Statement | ||||
PARTICULARS | Amount | |||
Sales (25,000 * $54) | $1,350,000 | |||
Less: Variable cost of goods sold: | ||||
Opening inventory | $0 | |||
Add: Variable cost of goods manufactured (30,000 * $20) | $600,000 | |||
Variable cost of goods available for sale | $600,000 | |||
Less: Ending inventory [(30,000 - 25,000) * $20] | -$100,000 | |||
Variable cost of goods sold | $500,000 | |||
Gross Contribution Margin | $850,000 | |||
Less: Variable Selling and Administrative Expenses (25,000 * $1) | $25,000 | |||
Contribution Margin | $825,000 | |||
Less: Fixed expenses: | ||||
Fixed manufacturing overhead | $420,000 | |||
Fixed selling and administrative expenses | $330,000 | $750,000 | ||
Net operating income | $75,000 | |||
*Variable cost of goods manufactured = Units produced * Variable unit product cost | ||||
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 300,000 $ 190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit. Required: 1. Assume that the company...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: A A Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative A A $264,000 $174,000 During the year, the company produced 22,000 units and sold 18,000 units. The selling price of the company's product is $45 per unit. Required: 1. Assume that...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: 14 5 Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $264,000 $174,000 During the year, the company produced 33,000 units and sold 15,000 units. The selling price of the company's product is $52 per unit. Required: 1. Assume that the company...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $385,000 $295,000 During the year, the company produced 35,000 units and sold 17,000 units. The selling price of the company's product is $58 per unit. Required: 1. Assume that the company uses absorption...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: olnts Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative Рел о eBook $320,000 $230,000 Hint During the year, the company produced 32,000 units and sold 17,000 units. The selling price of the company's product is $53 per unit. Print Required: 1....
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ $ $ 12 5 1 1 $360,000 $ 270,000 During the year, the company produced 36,000 units and sold 18,000 units. The selling price of the company's product is $55 per unit....
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: kipped Variable costs per unit: Manufacturing Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative eBook $385,000 $295,000 Hint Print References During the year, the company produced 35,000 units and sold 17,000 units. The selling price of the company's product is $58 per unit. Required: 1. Assume...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ $ $ $ 10 7 3 3 $380,000 $290,000 During the year, the company produced 38,000 units and sold 18,000 units. The selling price of the company's product is $61 per unit....
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: $ 11 Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $264,000 $174,000 During the year, the company produced 22,000 units and sold 18.000 units. The selling price of the company's product is $45 per unit. Required: 1. Assume that the company...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative wa $ 300,000 $ 190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit. Required: 1. Assume that the...