Question

On December 31, the end of the first year of operations, Frankenreiter Inc., manufactured 6,000 units and sold 5,200 units. The following income statement was prepared, based on the variable costing concept:

Frankenreiter Inc. Variable Costing Income Statement For the Year Ended December 31, 20Y1
Sales			$2,028,000
Variable cost of goods sold:
Variable cost of goods manufactured	$1,122,000
EInventory, December 31	(149,600)
Total variable cost of goods sold			972,400
Manufacturing margin			$1,055,600
Total variable selling and administrative expenses			244,400
Contribution margin			$811,200
Fixed costs:
Fixed manufacturing costs	$516,000
Fixed selling and administrative expenses	161,200
Total fixed costs			677,200
Income from operations			$134,000

Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.

Variable costing	$
Absorption costing	$

On March 31, the end of the first month of operations, Sullivan Equipment Company prepared the following income statement, based on the variable costing concept:

Sullivan Equipment Company Variable Costing Income Statement For the Month Ended March 31
Sales (11,700 units)			$514,800
Variable cost of goods sold:
Variable cost of goods manufactured	$243,000
Inventory, March 31 (1,800 units)	(32,400)
Total variable cost of goods sold			210,600
Manufacturing margin			$304,200
Variable selling and administrative expenses			128,700
Contribution margin			$175,500
Fixed costs:
Fixed manufacturing costs	$54,000
Fixed selling and administrative expenses	35,100
Total fixed costs			89,100
Income from operations			$86,400

Prepare an income statement under absorption costing. Round all final answers to whole dollars.

Sullivan Equipment Company
Absorption Costing Income Statement
For the Month Ended March 31
		$
Cost of goods sold:
	$
		$
		$

Answer 1

The unit cost of goods manufactured, based on:
Variable costing	187	(1122000/6000)
Absorption costing	273	(1122000+516000)/6000