During the first year of operations, 18,000 units were manufactured and 13,500 u
ID: 2429866 • Letter: D
Question
During the first year of operations, 18,000 units were manufactured and 13,500 units were sold. On August 31, Olympic Inc. prepared the following income statement based on the variable costing concept:
Olympic Inc.
Variable Costing Income Statement
For Year Ended August 31, 20--
$297,000
$288,000
72,000
216,000
$ 81,000
40,500
$ 40,500
$ 12,000
10,800
22,800
$ 17,700
?
Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.
Olympic Inc.
Variable Costing Income Statement
For Year Ended August 31, 20--
$297,000
Variable cost of goods sold: Variable cost of goods manufactured$288,000
Less ending inventory72,000
Variable cost of goods sold216,000
Manufacturing margin$ 81,000
Variable selling and administrative expenses40,500
Contribution margin$ 40,500
Fixed costs: Fixed manufacturing costs$ 12,000
Fixed selling and administrative expenses10,800
22,800
Income from operations$ 17,700
Explanation / Answer
Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.
Variable costing concept = 288000/18000 = 16 per unit
Absorption costing concept = (288000+12000)/18000 = 16.67 per unit
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