On March 31, the end of the first year of operations, Barnard Inc., manufactured 3,500 units and sold 3,000 units. The following income statement was prepared, based on the variable costing concept:
Barnard Inc. Variable Costing Income Statement For the Year Ended March 31, 20Y1 |
||||
Sales | $1,200,000 | |||
Variable cost of goods sold: | ||||
Variable cost of goods manufactured | $672,000 | |||
Inventory, March 31 | (96,000) | |||
Total variable cost of goods sold | (576,000) | |||
Manufacturing margin | $624,000 | |||
Total variable selling and administrative expenses | (144,000) | |||
Contribution margin | $480,000 | |||
Fixed costs: | ||||
Fixed manufacturing costs | $308,000 | |||
Fixed selling and administrative expenses | 96,000 | |||
Total fixed costs | (404,000) | |||
Operating income | $76,000 |
Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.
Solution : | |||
Units manufactured | 3500 | ||
Particulars | Calculation | Variable costing concept | absorption costing concept |
Variable cost of goods manufactured | (672000/3500) | $192 | $192 |
Fixed manufactring costs | (308000/3500) | $88 | |
unit cost of goods manufactured | $192 | $280 | |
On March 31, the end of the first year of operations, Barnard Inc., manufactured 3,500 units...
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