Labadie Corporation manufactures and sells one product. The following informatio
ID: 2539988 • Letter: L
Question
Labadie Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: 3 Variable costs per unit: Direct materials 118 Fixed costs per year: Direct labor Fixed manufacturing overhead Fixed selling and administrative expenses $1,009,800 $3,350,700 $3,278,200 The company does not have any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, the company produced 45,900 units and sold 44,300 units. The company's only product is sold for $188 per unit. Assume that the company uses a variable costing system that assigns $22 of direct labor cost to each unit that is produced. The unit product cost under this costing system is:Explanation / Answer
4.
Answer: $287 per unit
In this case fixed cost for direct labor and manufacturing cost should be divided by 45,900 units to get the unit cost; and the fixed selling expenses should be divided by units sold 44,300 to get the unit cost, since these are related.
Unit cost under variable costing method = Material cost + Labor cost + Manufacturing overhead + Selling cost
= $118 + ($1,009,800 / 45,900) + ($3,350,700 / 45,900) + ($3,278,200 / 44,300)
= $118 + $22 + $73 + $74
= $287
5.
Answer: B; product, period
Direct cost is product cost and indirect cost is period cost. Since this is a clothing store, purchasing clothing becomes a direct cost; therefore, it should be a product cost. Sales commission is indirect in nature; therefore, it should be treated as period cost.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.