Question

10.00 polnts Dance Creations manufáctures authentic Hawaiian hula skirts that are purchased for traditional Hawailan celebrations, costume parties, and other functions. During its first year of business, the company incurred the following costs: Variable Cost per Hula Skirt Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses $ 9.60 3.40 1.05 0.40 Fixed Cost per Month Fixed manufacturing overhead Fixed selling and administrative expenses $15,875 4,950 Dance Creations charges $30 for each skirt that it sells. During the first month of operation, it made 1,500 skirts and sold 1,375 Required: 1. Assuming Dance Creations uses variable costing, calculate the variable manufacturing cost per unit for last month. (Round your answer to 2 decimal places.) Total Variable Mfg Cost/Unit

Answer 1

Assuming that the company uses Variable costing (Fixed costs considered as period costs) Total Variable Manufacturing cost per unit 14.05 Note: Direct Material cost per unit Direct Labour cost per unit Variable Manufacturing cost per unit Total Variable Manufacturing cost per unit 9.6 3.4 1.05 14.05 Dance Creations Variable Costing Income Statement Particulars Amount Amount 41,250 Sales (-)Variable expenses: Variable Cost of goods sold (Note 1) Variable selling and administrative costs (0.4*1375) -19318.75 550 -19868.75 (-)Fixed Expenses Fixed Selling and administrative expenses Fixed manufacturing expenses 15875 -4950 20825 Net Operating Income (Loss] 556.25 Note: 1 Variable Cost of goods solod Direct Material (9.60*1375) Direct Labour (3.40 *1375) Variable Manufacturing costs (1.05*1375) Variable Cost of goods sold 13200 4675 1443.75 19318.75