Exercise 19-17 Siren Company builds custom fishing lures for sporting goods stor

Question

Exercise 19-17 Siren Company builds custom fishing lures for sporting goods stores. 3n its first year of operations, 2017, the company Incurred the following cests Varlable Costs per Unit 3.59 Resuits by Study Variable manufacturing overhead Variable seling and aoministrative expenses Fixed Costs per Year Pxed selling and administrative expenses Siren Company sells the fishing lures for $26.00. During 2017, the 231,400 $218,504 company soild 79,000 tures and produced 89,000 lures Your answer is correct. ing the co wy uses varasie eosng, aici Sren's mandadumngmtper unt tw 2017.mund answer to 2deol" places, 410S0.J Your answer is partialily correct. Try agein Prepar.. watte coating wome statene, 2017. (Enter negativ. ts e-a negative needing the number e 4s or es" e (45

Explanation / Answer

Answer a. Calculation of Cost per Unit Under Variable Costing Direct Material                     7.80 Direct Labor                     3.59 Variable MOH                     6.03 Cost per Unit                  17.42 SIREN COMPANY Variable Costing Income Statement For theYear Ended Dec 31, 2017 Sales - 79,000 Units X $26    2,054,000.00 Cost of Goods Sold - 79,000 Units X $17.42    1,376,180.00 Variable Selling & Administrative Expense        320,740.00    1,696,920.00 Contribution Margin        357,080.00 Fixed Cost Fixed Manufacturing Cost        231,400.00 Fixed Selling & Administrative Expenses        218,504.00        449,904.00 Income From Operations        (92,824.00) Answer b. Calculation of Cost per Unit Under Absorption Costing Units Produced          89,000.00 Units Sold          79,000.00 Direct Material                     7.80 Direct Labor                     3.59 Variable MOH                     6.03 Fixed MOH - $231,400 / 89,000 Units                     2.60 Cost per Unit                  20.02 Note: Selling and administrative expenses (both variable and fixed) are not relevant for the computation of unit product cost in both absorption costing & variable costing. SIREN COMPANY Absorption Costing Income Statement For theYear Ended Dec 31, 2017 Sales - 79,000 Units X $26    2,054,000.00 Cost of Goods Sold - 79,000 Units X $20.02    1,581,580.00 Gross Profit        472,420.00 Variable Selling & Administrative Expenses        320,740.00 Fixed Selling & Administrative Expenses        218,504.00        539,244.00 Net Income (Loss)        (66,824.00)

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