Shadowlands Inc. produces venetian blinds for homes and business. They reported

Question

Shadowlands Inc. produces venetian blinds for homes and business. They reported the following financial information for the previous period: Direct Materials 3,000 units used (purchased at $50/unit) Direct Labor 200 hrs/employee 15 employees each paid at $20/hr Production Manager Salary $6,000 Accounting Manager Salary $5,000 Factory Rent $15,000 Administration Building Rent $1,500 Factory Utilities (variable cost) $4,000 Equipment Depreciation (fixed cost) $1,500 Equipment Maintenance (variable cost) $500 Total units produced in the period 1,500 2. What is the per-unit cost of inventory produced under absorption costing ? 3. What is the per-unit cost of inventory produced under variable costing ?

Explanation / Answer

Note :

Fixed manufacturing overhead = Production Manager Salary + Factory Rent + Equipment Depreciation

=  $6,000 + $15,000 + $1,500 = $22,500

Variable manufacturing overhead = Factory Utilities + Equipment Maintenance = $4,000 + $500 = $4,500  ;

Answer 2

Per-unit cost of inventory produced under absorption costing

Answer 3

Per-unit cost of inventory produced under variable costing

Particular Amount ($) Direct Materials ( 3,000 * $50) 150,000 Direct Labor (200 * 15* $20) 60,000 Variable manufacturing overhead 4,500 Fixed manufacturing overhead 22,500 Total Cost 237,000 Divide by units produced in the period 1,500 Per-unit cost of inventory produced under absorption costing $158

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