Question

Help >> 11 View Av A Question 4: Inventory Valuation Suggested time: 15 minutes Athabasca Auto makes and sell auto batteries. In 2019 it made 120.000 batteries and sold 95.000 of them at an average selling price of S480 per unit. The following additional information relates to Athabasca Auto for 2019: I Direct Materials S160.00 per unit Direct manufacturing labour S32.00 per unit Variable manufacturing costs S64.00 per unit Sales commissions S48.00 per part Fixed manufacturing costs S1.750,000 per year Fixed administrative expenses S670,000 per year What is Athabasca Auto manufacturing cost per unit using: a. Variable costing (7 marks) b. Absorption costing (8 marks) Page Break

Answer 1

Calculation of unit product cost under Variable Costing: Particulars Amount Direct materials $ 160.00 Direct labor $ 32.00 Variable Overhead per unit $ 64.00 Manufacturing cost per unit $ 256.00 Calculation of unit product cost under absorption Costing: Particulars Amount Direct materials $ 160.00 Direct labor $ 32.00 Variable Overhead per unit $ 64.00 Fixed overhead per unit $ 14.58 Manufacturing cost per unit $ 270.58 *Fixed overhead per unit = Fixed overhead / Units produced * Kindly Comment down for any clarifications/ queries and please upvote.