On June 30, the end of the first year of operations, Johnson Industries, Inc., m

Question

On June 30, the end of the first year of operations, Johnson Industries, Inc., manufactured 2,000 units and sold 1,700 units. The following income statement was prepared, based on the variable costing concept: Sales $782,000 Variable cost of goods sold: Variable cost of goods manufactured $442,000 Less inventory, July 31 66,300 Variable cost of goods sold 375,700 Manufacturing margin $406,300 Variable selling and administrative expenses 93,500 Contribution margin $312,800 Fixed costs: Fixed manufacturing costs $202,000 Fixed selling and administrative expenses 62,900 264,900 Income from operations $47,900 Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept. Variable costing $ Absorption costing $

Explanation / Answer

A)

Variable Cost of Goods Manufactured / Units Manufactured = Unit Costs

25,344,000/2200 units = $11,520/unit

B)

(Variable Costs of Goods Manufactured + Fixed Manufacturing Costs)/Units Manufactured = Unit Costs

(25,344,000+11,616,000)/2,200 units = $16,800/unit

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