A) direct manufacturing cost per unit (variable cost) = direct material + direct labour + variable manufacturing overhead
= 10 + 3.5 + 1.5
Direct manufacturing cost per unit (VC) = $15
Direct manufacturing cost (VC) = 50000* 15
Direct manufacturing cost (VC) = $750000
Direct manufacturing cost (fixed cost) = 60000*14
Direct manufacturing cost (FC) = $ 840000
So, total direct manufacturing cost incurred to make 50000 units = Direct manufacturing cost (VC) + Direct manufacturing cost (FC)
Total direct manufacturing cost =750000+840000
Total direct manufacturing cost = $ 1590000
B) Indirect manufacturing variable cost per unit = variable selling expense
Indirect manufacturing variable cost per unit = $1.5
Indirect manufacturing variable cost = 50000*1.5
Indirect manufacturing variable cost = $75000
Indirect manufacturing fixed cost per unit = fixed selling + fixed administration expense
Indirect manufacturing fixed cost per unit = 4+ 2.5
Indirect manufacturing fixed cost per unit = $6.5
Indirect manufacturing fixed cost = 60000*6.5
Indirect manufacturing fixed cost = $390000
Total indirect manufacturing cost = indirect manufacturing variable cost + indirect manufacturing fixed cost
Total indirect manufacturing cost = 75000+390000
Total indirect manufacturing cost = $465000
C) To calculate the unit manufacturing cost
We have to add both the direct as well as indirect cost and then divide it by total units which is 50000 units.
Total cost = total direct cost + total indirect cost
Total cost = 1590000 + 465000
Toral cost = $2055000
Manufacturing cost per unit = Total cost/ no. Of units
Manufacturing cost per unit = 2055000/50000
Manufacturing cost per unit = $41.1
Note-
Fixed cost remains same whether the units produced are less or more, i.e. while calculating I have taken 60000 units
D) Income statement
Sales (40000*100). 4000000
Less- Variable cost
(825000/50000= 16.5*40000)
= 660000. 660000
Gross income. 3340000
Less- fixed cost
(840000+390000). 1230000
Operating Income. 211000
Note-
Variable cost is already calculated above in part a and part b and 825000 is the total variable cost for 50000 units.
And we are selling only 40000 units i.e. to calculate the variable cost of 40000 units, I have divided total variable cost by 50000 units and multiply it by 40000 units.
Fixed cost remains the same for all the units i.e. I have added the fixed cost of part a and part b above.
Please help me. Thanks. 10. Northern Illinois Manufacturing's relevant range of production is 40,000 to 80,000...
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