In its first year of business, the McCormik Co. produced and sold 14,000 units and incurred...
In its first year of business, the McCormik Co. produced and sold 14,000 units and incurred the following costs:
Manufacturing Costs:
| Cost Per Unit | |
| Direct Material | $20 |
| Direct Labor | $5 |
| Var. Manufacturing Overhead | $8 |
| Fixed Manufacturing Overhead | $21 |
| Variable Selling and Admin. | $3 |
| Fixed Selling and Admin. | $9 |
| Units Produced | 15,000 |
| Units Sold | 13,000 |
| Selling Price Per Unit | 100 |
| Tax Rate | 25% |
Show the net income under absorption and variable costing. Calculate Net income for 13,000 sold and 15,000 produced.
Homework Answers
| Sales (100*13,000) | 1500,000 | ||
| Direct Material (20*15000) | 300000 | ||
| Direct Labor(5*15000) | 75000 | ||
| Prime Cost | 375,000 | ||
| Fixed manufacturing Overhead(21*14000) | 294000 | ||
| Variable Manufacturing Overhead (8*15000) | 120000 | 414000 | |
| Total Manufacturing Cost | 789000 | ||
| Less: Closing Inventory (789000/2000*15000= | 105200 | ||
| Cost of Manufactured Goods sold | 683800 | ||
| Fixed Selling and Administrative Overhead (9*14000) | 126000 | ||
| Variable Selling and Administrative Overhead (3*13000) | 39000 | 165000 | |
| Total Cost of Goods Sold | 848800 | ||
| Net Operating Income | 651200 | ||
| Less: Taxes @ 25% | 162800 | ||
| Income after taxes | 488400 |
| Sales | 1500000 | |
| Less: Variable Cost of Goods Sold | ||
| Direct Material (20*13000) | 260,000 | |
| Direct Labor (5*13000) | 65000 | |
| Variable Manufacturing Overhead (8*13000) | 104000 | |
| Variable Selling and Administrative Overhead (3*13000) | 39000 | 468000 |
| Contribution | 1032000 | |
| Less: Fixed Costs | ||
| Fixed Manufacturing Overhead | 294000 | |
| Fixed Selling and Administrative Overhead | 126000 | 420,000 |
| Net Income | 612000 | |
| Less: Tax @ 25% | 153000 | |
| Income after Taxes | 459000 | |
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