Ans. 1 | 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 | ||
Direct labor | $4 | ||
Variable Overhead per unit | $1 | ||
Fixed overhead per unit ($308,000 / 28,000) | $11 | ||
Unit product cost | $27 | ||
*Fixed overhead per unit = Fixed overhead / Units produced | |||
Ans. 1 b | Lynch Company | ||
Absorption Costing Income Statement | |||
PARTICULARS | Amount | ||
Sales (24,000 * $41) | $984,000 | ||
Less: Cost of goods sold | |||
Opening inventory | $0 | ||
Add: Cost of goods manufactured (28,000*$27) | $756,000 | ||
Cost of goods available for sale | $756,000 | ||
Less: Ending inventory [(28,000 - 24,000) * $27] | -$108,000 | ||
Cost of goods sold (total) | $648,000 | ||
Gross margin | $336,000 | ||
Selling & Administrative expenses: | |||
Fixed | $218,000 | ||
Variable (24,000 * $1) | $24,000 | ||
Total Selling and administrative expenses | $242,000 | ||
Net Income | $94,000 | ||
*Variable selling & administrative expenses = Units sold * Variable selling and administrative expenses per unit | |||
*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 | ||
Direct labor | $4 | ||
Variable Overhead per unit | $1 | ||
Unit product cost | $16 | ||
Ans. 2 b | Lynch Company | ||
Variable Costing Income Statement | |||
Particulars | Amount | ||
Sales (24,000 * $41) | $984,000 | ||
Less: Variable cost of goods sold: | |||
Opening inventory | $0 | ||
Add: Variable cost of goods manufactured (28,000 * $16) | $448,000 | ||
Variable cost of goods available for sale | $448,000 | ||
Less: Ending inventory [(28,000 - 24,000) * $16] | -$64,000 | ||
Variable cost of goods sold | $384,000 | ||
Gross Contribution Margin | $600,000 | ||
Less: Variable Selling and Administrative Expenses ($1 * 24,000) | $24,000 | ||
Contribution Margin | $576,000 | ||
Less: Fixed expenses: | |||
Fixed manufacturing overhead | $308,000 | ||
Fixed selling and administrative expenses | $218,000 | $526,000 | |
Net operating income | $50,000 | ||
*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 $ 11 Direct labor $ 4 Variable manufacturing overhead $ 1 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 308,000 Fixed selling and administrative $ 218,000 During the year, the company produced 28,000 units and sold 24,000 units. The selling price of the company’s product is $41...
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 $ 15 $ 5 $ 1 $ 1 $ 286,000 $ 196,000 During the year, the company produced 26,000 units and sold 22,000 units. The selling price of the company's product is $46...
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: 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...
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 14 3 1 $290,000 $200,000 During the year, the company produced 29,000 units and sold 22,000 units. The selling price of the company's product is $42 per unit. Required: 1. Assume that the...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable conta per uniti Manufacturing Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Pixed costs per year. Fixed manufacturing overhead Fixed selling and administrative $420,000 $330,000 During the year, the company produced 30,000 units and sold 25,000 units. The selling price of the company's product is $54 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 $ 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: 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 uses absorption...
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 7 2 2 $248,000 $ 158,000 During the year, the company produced 31,000 units and sold 21,000 units. The selling price of the company's product is $44 per...