23-2) Reid Company manufactures toasters. For the first 8 months of 2012, the co

Question

23-2) Reid Company manufactures toasters. For the first 8 months of 2012, the company reported the following operating results while operating at 75% of plant capacity. Sales (400,000 units) $4,000,000 Cost of goods sold 2,400,000 Gross profit 1,600,000 Operating expenses 900,000 Net income $ 700,000 Cost of goods sold was 70% variable and 30% fixed. Operating expenses were 60% variable and 40% fixed. In September, Reid Company receives a special order for 40,000 toasters at $6.00 each from Salono Company of Mexico City. Acceptance of the order would result in $8,000 of shipping costs but no increase in fixed operating expenses. (a1) Calculate unit costs for variable cost of goods sold and variable operating expenses. (Round answers to 2 decimal places, e.g. $5.25.) Variable cost of goods sold per unit $ ____ Variable operating expenses per unit $ _____

Explanation / Answer

Unit Costs for Variable Cost of Goods Sold = (2400000*.70)/400000 = 4.2 Unit Costs for Variable Operating Expenses = (900000*.60)/400000 = 1.35

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