ACCOUNTING Week # 12 Chapter 19 IThe following information applies to the questi

ID: 2571509 • Letter: A

Question

ACCOUNTING Week # 12 Chapter 19 IThe following information applies to the questions displayed below Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 46.000 units and sold 38,000 units at a price of $120 per unit Manufacturing costs Direct materials per unit Direct labor per unit Variable overhead per unit Fixed overhead for the year $48 18 6 $460.000 Selling and administrative cost Variable selling and administrative cost per unit Fixed selling and administrative cost per year $12 $120,000 volue 100 points

Explanation / Answer

Solution:

Variable Costing Income Statement

Sales (38,000 Units x $120)

$4,560,000

Less: Variable Costs

Variable Production Cost (Unit Product Cost $72 x Produced Units 46,000 Units)

$3,312,000

Variable Selling and administrative Expenses (Unit Sold 38,000 x $12)

$456,000

Less: Ending Inventory (8,000 Units x $72)

($576,000)

Total Variable Cost

$3,192,000

Contribution Margin

$1,368,000

Fixed Expenses:

Fixed Manufacturing Overhead Costs

$460,000

Fixed Selling and administrative expenses

$120,000

Total Fixed Expenses

$580,000

Net Operating Income

$788,000

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