Question

Excel File Edit View Insert Format Tools Data Window Help Variable costing proje Home Review View Insert of out Copy Page Layout Arial Formulas Data 10 • A- A+ - Wrap Text Custom Merge & Center - $ % ) Office Update To keep up-to-date with security updates, fixes, and improvements, choose Check for Updates 29 x vfx Rainbow Concrete Corporation has provided the following data for its two most recent years of operation: Selling price per unit $88 8 9 0 11 Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative expenses Variable selling and administrative expense per unit sold Forced selling and administrative expense per year 12 13 14 15 16 360,000 74,000 17 Yes 18 19 20 21 22 Units in beginning inventory Units produced during the year Units sold during the year Unitsin ending inventory 15,000 10,000 5.000 Year 2 5,000 12,000 15.000 2,000 Complete (a) through € 26 (a). Assume the company uses absorption costing. Compute the unit product cost in each year. Year 1 Year 2 Sheet + Ready esc

Answer 1

a.

	Year 1	Year 2
Direct Materials	$      2,70,000	$      2,16,000
Direct Labor	$      1,80,000	$      1,44,000
Variable Manufacturing Overhead	$          90,000	$          72,000
Fixed Manufacturing Overhead	$      3,60,000	$      3,60,000
Total manufacturing Cost	$      9,00,000	$      7,92,000
Units Produced	15000	12000
Product Cost per unit	$                 60	$                 66

b.

	Year 1	Year 2
Sales Revenue	$      8,80,000	$    13,20,000
Cost of Goods Sold
Beginning Inventory	$                  -	$      3,00,000
Plus Cost of Goods Manufactured	$      9,00,000	$      7,92,000
Less Ending Inventory	$      3,00,000	$      1,32,000
Cost of Goods Sold	$      6,00,000	$      9,60,000
Gross Margin	$      2,80,000	$      3,60,000
Variable Selling and administrative	$          70,000	$      1,05,000
Fixed Selling and administrative	$          74,000	$          74,000
Operating Income	$      1,36,000	$      1,81,000

c.

	Year 1	Year 2
Direct Materials	$                 18	$                 18
Direct Labor	$                 12	$                 12
Variable Manufacturing Overhead	$                    6	$                    6
Product Cost per unit	$                 36	$                 36

d.

	Year 1	Year 2
Sales	$      8,80,000	$    13,20,000
Cost of Goods Sold
Beginning Inventory	$                  -	$      1,80,000
Plus Cost of Goods Manufactured	$      5,40,000	$      4,32,000
Less Ending Inventory	$      1,80,000	$          72,000
Cost of Goods Sold	$      3,60,000	$      5,40,000
Variable Selling and administrative	$          70,000	$      1,05,000
Contribution Margin	$      4,50,000	$      6,75,000
Fixed Manufacturing OH	$      3,60,000	$      3,60,000
Fixed Selling and administrative	$          74,000	$          74,000
Operating Income	$          16,000	$      2,41,000

e.

	Year 1	Year 2
Income as per Variable Costing	$          16,000	$      2,41,000
Add : Fixed Manufacturing Overhead carried forward	$      1,20,000	$          60,000
Less : Fixed Manufacturing Overhead released		$      1,20,000
Income as per Absorption Costing	$      1,36,000	$      1,81,000