Question

Atlanta, Inc., planned and actually manufactured 260,000 units of its single product in 2017, its first year of operation. Variable manufacturing cost was $24 per unit produced. Variable operating (nonmanufacturing) cost was $11 per unit sold. Planned and actual fixed manufacturing costs were $780,000. Planned and actual fixed operating (nonmanufacturing) costs totaled $390,000. Atlanta sold 120,000 units of product at $46 per unit. Read the requirements.

please help me figure out where i went wrong when solving this problem

Answer 1

Requirement 1 Absorption costing $5,520,000 Revenues (120,000 units x $46 per unit) Cost of goods sold Variable manufacturing cost (120,000 x $24) Allocated fixed manufacturing costs (120,000 x $3) $2,880,000 $360,000 ($3.240,000) Gross Margin $2.280,000 Operating costs: Variable Operating (120,000 x $11) $1,320,000 $390,000 Fixed operating ($1,710,000) Operating Income $570,000 Requirement 2 Variable Costing Revenues (120,000 units x $46 per unit) $5,520,000 Variable costs: Variable manufacturing cost of goods sold (120,000 x $24) $2,880,000 Variable operating cost (120,000 x $11) $1.320,000 $4,200,000) Contribution margin $1,320,000 Fixed costs: Fixed manufacturing costs $780,000 Fixed operating costs $390,000 ($1.170.000) Operating Income $150,000