Question

Crane makes Halloween costumes. The company incurred the following total costs to produce 29,100 costumes.

Direct materials		$244,000
Direct labor		168,000
Variable overhead		18,680
Fixed overhead		145,500

(a) Under the absorption costing method, what is the average unit product cost? Using this method, how much product cost would be recorded on the income statement if 21,100 units were sold? (Round per unit to 2 decimal places, e.g. 15.25 and product cost to 0 decimal places, e.g. 5,275.)

Average unit product cost		???
Product cost		???

(b) Under the variable costing method, what is the average unit product cost? Using this method, how much product cost would be recorded on the income statement if 21,100 units were sold? (Round per unit to 2 decimal places, e.g. 15.25 and product cost to 0 decimal places, e.g. 5,275.)

Average unit product cost		???
Product cost		???

Answer 1

A B с 2. 1 a) 2 Particulars Amount 3 Direct materials $ 244,000 4 Direct labor $ 168,000 5 Variable overhead $ 18,680 6 Fixed overhead $ 145,500 7 Total product cost $ 576,180 8 Number of units 29,100 9 Average unit product cost $ 19.80 10 11 If 21,100 units were sold: 12 Product cost $ 417,780 13 14 b) 15 Particulars Amount 16 Direct materials $ 244,000 17 Direct labor $ 168,000 18 Variable overhead $ 18,680 19 Total product cost $430,680 20 Number of units 29,100 21 Average unit product cost $ 14.80 22 23 If 21,100 units were sold: 24 Product cost $ 312,280 25 26 Note: As per variable costing, fixed manufacturing costs 27 are treated as period costs.

A B Amount 244000 168000 18680 145500 IESUM(B3:36) 29100 =+B7/B8 =+B9+21100 1 a) 2 Particulars 3 Direct materials 4 Direct labor 5 Variable overhead 6 Fixed overhead 7 Total product cost 8 Number of units 9 Average unit product cost 10 11 If 21,100 units were sold: 12 Product cost 13 14 b) 15 Particulars 16 Direct materials 17 Direct labor 18 Variable overhead 19 Total product cost 20 Number of units 21 Average unit product cost 22 23 If 21,100 units were sold: 24 Product cost Amount 244000 168000 18680 =SUM(B16:B18) 29100 =+B19/B20 =+B21*21100