Exercise 19-17 Polk Company builds custom fishing lures for sporting goods store
ID: 2469160 • Letter: E
Question
Exercise 19-17
Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.
Variable Cost per Unit
Direct materials
$8.10
Direct labor
$2.65
Variable manufacturing overhead
$6.21
Variable selling and administrative expenses
$4.21
Fixed Costs per Year
Fixed manufacturing overhead
$253,650
Fixed selling and administrative expenses
$259,308
Polk Company sells the fishing lures for $27.00. During 2012, the company sold 80,800 lures and produced 95,000 lures.
(a)
Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50.)
Prepare a variable costing income statement for 2012.
POLK COMPANY
Income Statement
For the Year Ended December 31, 2012
Variable Costing
Administrative ExpensesContribution MarginFixed Manufacturing OverheadFixed Selling and Administrative ExpensesGross ProfitNet Income/(Loss)SalesTotal Fixed ExpensesTotal Variable ExpensesVariable Cost of Goods SoldVariable Selling and Administrative Expenses
$
Administrative ExpensesContribution MarginFixed Manufacturing OverheadFixed Selling and Administrative ExpensesGross ProfitNet Income/(Loss)SalesTotal Fixed ExpensesTotal Variable ExpensesVariable Cost of Goods SoldVariable Selling and Administrative Expenses
$
Administrative ExpensesContribution MarginFixed Manufacturing OverheadFixed Selling and Administrative ExpensesGross ProfitNet Income/(Loss)SalesTotal Fixed ExpensesTotal Variable ExpensesVariable Cost of Goods SoldVariable Selling and Administrative Expenses
Administrative ExpensesContribution MarginFixed Manufacturing OverheadFixed Selling and Administrative ExpensesGross ProfitNet Income/(Loss)SalesTotal Fixed ExpensesTotal Variable ExpensesVariable Cost of Goods SoldVariable Selling and Administrative Expenses
Administrative ExpensesContribution MarginFixed Manufacturing OverheadFixed Selling and Administrative ExpensesGross ProfitNet Income/(Loss)SalesTotal Fixed ExpensesTotal Variable ExpensesVariable Cost of Goods SoldVariable Selling and Administrative Expenses
Administrative ExpensesContribution MarginFixed Manufacturing OverheadFixed Selling and Administrative ExpensesGross ProfitNet Income/(Loss)SalesTotal Fixed ExpensesTotal Variable ExpensesVariable Cost of Goods SoldVariable Selling and Administrative Expenses
Administrative ExpensesContribution MarginFixed Manufacturing OverheadFixed Selling and Administrative ExpensesGross ProfitNet Income/(Loss)SalesTotal Fixed ExpensesTotal Variable ExpensesVariable Cost of Goods SoldVariable Selling and Administrative Expenses
$
Exercise 19-17
Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.
Variable Cost per Unit
Direct materials
$8.10
Direct labor
$2.65
Variable manufacturing overhead
$6.21
Variable selling and administrative expenses
$4.21
Fixed Costs per Year
Fixed manufacturing overhead
$253,650
Fixed selling and administrative expenses
$259,308
Polk Company sells the fishing lures for $27.00. During 2012, the company sold 80,800 lures and produced 95,000 lures.
(a)
Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50.)
Explanation / Answer
Unit product cost = 8.1+2.65+6.21 = $16.96 per unit
sales (80800*27) 2,181,600 less:Variable cost of goods sold (16.96 * 80800) (1,370,368) contribution margin 811,232 less: Variable selling (80800 * 4.21) (340,168) Fixed selling (259308) Fixed manufactuirng (253650) Total period cost (853126) net income -41894Related Questions
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