Exercise 19-17 Siren Company builds custom fishing lures for sporting goods stor
ID: 2546453 • Letter: E
Question
Exercise 19-17 Siren Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2017, the company incurred the following costs. Variable Costs per Unit Direct materials Direct labor Variable manufacturing overheacd Variable selling and administrative expenses $7.58 $3.48 $5.86 $3.94 Fixed Costs per Year Fixed manufacturing overhead Fixed selling and administrative expenses $237,820 $212,201 Siren Company sells the fishing lures for $25.25. During 2017, the company sold 79,000 lures and produced 94,000 lures. Assuming the company uses variable costing, calculate Siren's manufacturing cost per unit for 2017. (Round answer to 2 decimal places, e.g.10.50.) Manufacturing cost per unitsExplanation / Answer
Answer
Manufacturing cost per unit
Under Variable Costing
Under Absorption Costing
Direct materials
7.58
7.58
Direct labor
3.48
3.48
Variable manufacturing overhead
5.86
5.86
Fixed Manufacturing Overhead per unit
[$237,820/94000 units] 2.53
Total manufacturing cost per unit
$16.92
$19.45
Amount ($)
Working
Sales
1994750
[79000 x $25.25]
Variable manufacturing cost
1336680
[79000 x $16.92]
Variable selling & Administrative expenses
311260
[79000 x $3.94]
1647940
Contribution margin
$346,810
[1994750 - 1647940]
Fixed manufacturing Overhead
237820
[given]
Fixed selling & administrative expenses
212201
[given]
450021
Net Income (Loss)
$(103,211)
[346810 - 450021]
Amount ($)
Working
Sales
1994750
[79000 x $25.25]
Cost of Goods Sold
1536550
[79000 x $19.45]
Gross Margin
$458,200
[1994750-1536550]
variable selling & administrative expenses
311260
[79000 x $3.94]
Fixed selling & administrative expenses
212201
[given]
523461
Net Income
$(65,261)
[458200-523461]
Manufacturing cost per unit
Under Variable Costing
Under Absorption Costing
Direct materials
7.58
7.58
Direct labor
3.48
3.48
Variable manufacturing overhead
5.86
5.86
Fixed Manufacturing Overhead per unit
[$237,820/94000 units] 2.53
Total manufacturing cost per unit
$16.92
$19.45
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