Alt 3. Given the following data, what absorption costing? is total product cost

Question

Alt 3. Given the following data, what absorption costing? is total product cost per unit under variable costing? under Direct labor Direct materials Overhead $2 per unit $5 per unit Total variable overhead Total fixed overhead 20,000 $200,000 Expected units to be produced 10,000 units 4. At the beginning of the period, the XYZ Department budgeted direct labor of $10,000 and supervisor salaries of $20,000 for 2,000 hours of production. The department actually completed 3,000 hours of production. Determine the budget for the department assuming that it uses flexible budgeting? 5. To meet projected annual sales, ABC Manufacturers, Inc. needs to produce 70,000 machines for 2012. The estimated January 1, 2012, inventory is 5,000 units, and the desired December 31, 2012, inventory is 10,000 units. What are projected sales units for 2012?

Explanation / Answer

3. Unit cost under variable costing

Direct material = $5 per unit

Direct labor = $2 per unit

Variable overhead = $2 [$20000 / 10000 units]

      = $9 per unit

     

4. Flexible budget (standard cost for actual hours)

Direct labor [$10000 / 2000 hours* 3000 hours] = $15000

Supervision salary (fixed cost) = $20000

      Total department cost = $35000

5. Total units to be produced = 70000

Add: estimated beginning inventory at jan1,2012 = 5000

less: Desired Ending inventory at Dec 31,2012 = (10000)

projected units to be sold = 65000 units

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