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 | $16 | |||
Direct labor | $10 | |||
Variable Overhead per unit | $3 | |||
Fixed overhead per unit ($760,000 / 40,000) | $19 | |||
Product Cost per unit | $48 | |||
*Fixed overhead per unit = Fixed overhead / Units produced | ||||
Ans. 1 b | HIGH COUNTRY INC. | |||
Absorption Costing Income Statement | ||||
PARTICULARS | Amount | |||
Sales (35,000 * $85) | $2,975,000 | |||
Less: Cost of goods sold | ||||
Opening inventory | $0 | |||
Add: Cost of goods manufactured (40,000*$48) | $1,920,000 | |||
Cost of goods available for sale | $1,920,000 | |||
Less: Ending inventory [(40,000 - 35,000) * $48] | -$240,000 | |||
Cost of goods sold (total) | $1,680,000 | |||
Gross margin | $1,295,000 | |||
Selling & Administrative expenses: | ||||
Fixed | $565,000 | |||
Variable (35,000 * $4) | $140,000 | |||
Total Selling and administrative expenses | $705,000 | |||
Net Income | $590,000 | |||
*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 | $16 | |||
Direct labor | $10 | |||
Variable Overhead per unit | $3 | |||
Total production cost per unit | $29 | |||
Ans. 2 b | HIGH COUNTRY INC. | |||
Variable Costing Income Statement | ||||
Particulars | Amount | |||
Sales (35,000 * $85) | $2,975,000 | |||
Less: Variable cost of goods sold: | ||||
Opening inventory | $0 | |||
Add: Variable cost of goods manufactured (40,000 * $29) | $1,160,000 | |||
Variable cost of goods available for sale | $1,160,000 | |||
Less: Ending inventory [(40,000 - 35,000) * $48] | -$145,000 | |||
Variable cost of goods sold | $1,015,000 | |||
Gross Contribution Margin | $1,960,000 | |||
Less: Variable Selling and Administrative Expenses ($4 * 35,000) | $140,000 | |||
Contribution Margin | $1,820,000 | |||
Less: Fixed expenses: | ||||
Fixed manufacturing overhead | $760,000 | |||
Fixed selling and administrative expenses | $565,000 | $1,325,000 | ||
Net operating income | $495,000 | |||
*Variable cost of goods manufactured = Units produced * Variable unit product cost | ||||
*Variable selling and administrative expenses = Units sold * Variable selling and administrative expenses per unit sold | ||||
High Country, Inc., produces and sells many recreational products. The company has just opened a new...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: 0 49,000 44,000 79 $ Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: 49,000 44,000 85 Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct labor cost...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: 0 49,000 44,000 75 Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses : Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation: Beginning inventory 0 Units produced 47,000 Units sold 42,000 Selling price per unit $ 75 Selling and administrative expenses: Variable per unit $ 2 Fixed (per month) $ 565,000 Manufacturing costs: Direct materials...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation: Beginning inventory 0 Units produced 47,000 Units sold 42,000 Selling price per unit $ 77 Selling and administrative expenses: Variable per unit $ 4 Fixed (per month) $ 565,000 Manufacturing costs: Direct materials...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation Beginning inventory Units produced 49,000 44,000 $79 Units solod Selling price per unit Selling and administrative expenses: Variable per unit Fixed per month Manufacturing costs: Direct materials cost per unit Direct labor cost...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: 39,000 34,000 to 79 Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct labor...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: 10,000 8,000 $75 Beginning inventory ......... Units produced .... Units sold .... Selling price per unit..... Selling and administrative expenses: Variable per unit .... Fixed (per month) ..... Manufacturing costs: Direct materials cost...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: Beginning inventory Units produced Units sold 0 37,000 32,000 $ Selling price per unit Selling and administrative expenses Variable per unit Fixed (per month) Manufacturing costs Direct materials cost per unit Direct labor...
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: 0 10,000 8,000 75 $ Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses : Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit...