Question

Siren Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2020, the company incurred the following costs.

Variable Costs per Unit
Direct materials		$9.60
Direct labor		$4.42
Variable manufacturing overhead		$7.42
Variable selling and administrative expenses		$4.99
Fixed Costs per Year
Fixed manufacturing overhead		$281,600
Fixed selling and administrative expenses		$268,928

Siren Company sells the fishing lures for $32.00. During 2020, the company sold 79,000 lures and produced 88,000 lures.

Assuming the company uses variable costing, calculate Siren’s manufacturing cost per unit for 2020. (Round answer to 2 decimal places, e.g. 10.50.)

Manufacturing cost per unit

$Type your answer here

  

  

Prepare a variable costing income statement for 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answer 1

Answer:
(a)
Particulars	per unit
Direct materials	$ 9.60
Direct labor	$ 4.42
Variable Overhead per unit	$ 7.42
Manufacturing cost per unit	$ 21.44

SIREN COMPANY Income Statement For 2020 Variable Costing
Sales   (88,000 x $ 32)		$ 2,816,000
Less: Variable cost of goods sold              (88,000 x $ 21.44)	$ 1,886,720
Less: Variable Selling and Administrative Expenses                (88,000 x $ 4.99)	$439,120	($ 2,325,840)
Contribution Margin		$ 490,160
Less: Fixed expenses
Fixed manufacturing overhead	$ 281,600
Fixed selling and Administrative expenses	$ 268,928	($550,528)
Netincome /(loss)		($60,368)