Exercise 19-17 Polk Company builds custom fishing lures for sporting goods store

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 $7.88 Direct labor $2.57 Variable manufacturing overhead $6.04 Variable selling and administrative expenses $4.10 Fixed Costs per Year Fixed manufacturing overhead $245,273 Fixed selling and administrative expenses $252,105 Polk Company sells the fishing lures for $26.25. During 2012, the company sold 80,500 lures and produced 94,700 lures. Collapse question part (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.) Manufacturing cost per unit $ Entry field with correct answer 16.49 part (b) Prepare a variable costing income statement for 2012. POLK COMPANY Income Statement For the Year Ended December 31, 2012. Variable Costing $ $ $ part (c) The parts of this question must be completed in order. This part will be available when you complete the part above. Expand question part (d) The parts of this question must be completed in order. This part will be available when you complete the part above.

Explanation / Answer

Ans a Manufacturing cost per unit rate Direct Material   M $7.88 Direct labor L $2.57 Variable manufacturing Overhead V 6.04 Manufacturing cost per unit $16.49 Note: Fixed manufacturing overhead is not taken included because it is fixed in nature only variable manufacturing expenses are taken Also variable selling and administrative head is not included because it is not a manufacturing expense it is nonmanufacturing expense Variable Costing Income Statement For the Year ended december 31,2012 No. of lures sold N 80500 Sales (80500*26.25) 2113125 Less: variable Cost Direct Material N*M $634,340 Direct labor N*L $206,885 Variable manufacturing Overhead N*V $486,220 Variable Manufacturing Cost $1,327,445 Less: variable selling and administrative expenses (4.1*80500) 330050 Total variable expenses $1,657,495 Contribution $455,630 Less: fixed expenses Fixed manufacturing overhead 245273 fixed selling and administrative expense 252105 Total Fixed expense 497378 Net Loss ($41,748)

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.