mases a Addison, Inc. makes a sirgele product, an indoor fireplace. Data for las
ID: 2540016 • Letter: M
Question
mases a Addison, Inc. makes a sirgele product, an indoor fireplace. Data for last year is as follows price per fireplace 420 costs: S Variable per unit produced 135 543 $37 210,000 6Direct materials 7 Direct labor 8 Variable manufacturing overhead 9Fixed manufacturing overhead per year 10 Selling and administrative expenses: 11 Variable per unit sold 12 Fixed per year 13 14 Units in beginning inventory 15 Units produced during the year 16 Units sold during the year 17 18 Use the data to answer the following $45 $190,000 5,000 4,500 19 201. Assume the company uses variable costing 21 22 Compute the unit product cost for one fireplace 23 24 Prepare a contribution margin income statement for the year Sheeti Amemptis)Explanation / Answer
Req 1 Compute the Ending Inventory Year 1 Units of Beginning Year 0 Units produced during the year 5,000 Units sold during the year 4,000 Units in ending inventory 1,000 The Variable costing Unit Product cost Year 1 Direct Material 135 Direct labour 43 Variable Manufacturing overheads 37 Variable costing unit prroduct cost 215 Construct The Variable Costing Income Statement under FIFO YEAR 1 Sales 1,680,000 Less: Variable cost variable cost of goods sold 860,000 Variable selling expense 180,000 1,040,000 Contribution margin 640,000 Fixed expense: Fixed Manufacturing overheads 210,000 Fixed selling expense 190,000 Net operating Income 240,000 Req 2: Fixed cost: 400,000 CM per unit: Selling price -Variable cost = $ 420-215-45 = $160 per unit Break even point in Units: Fixed cost / CM per unit ($ 400,000 /160 ) = 2,500 units Req 3: The Absorption Costing Unit Product Cost Year 1 Direct Material 135 Direct labour 43 Variable Manufacturing overheads 37 Fixed Manufacturing overheads 42.00 (210,000/5000 units) Absorption costing unit prroduct cost 257.00 The Absorption Costing Income Statement Year 1 Sales $1,680,000 Cost of Goods sold 1028000 Gross Margin $652,000 Selling and distribution expense 370,000 Net operating income 282,000
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