ment Exercise 19-17 siren Company builds custom fishing lures for sporting ooods

Question

ment Exercise 19-17 siren Company builds custom fishing lures for sporting ooods stores. In its first year of operations, 2017, the company incurred the following costs Variable Costs per Unit Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses $7,73 $3.55 $5.97 $4.02 Fixed Costs per Year Fixed manufacturing overhead Fixed selling and administrative expenses $234,780 $216,403 Siren Company sells the fishing lures for $25.75. During 2017, the company sold 82,000 lures and produced 91,000 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.s0.) Manufacturing cost per unit 17.25 LINK TO TEXT Prepare a variable costing income statement for 2017. (Enter negative amounts using either a nepative sign preceding the number as Policy 1 2000-2012 John Wiley&Sons.; In.s, All Rights Reserved. A Division of John Wiley & Sons Ins

Explanation / Answer

MANUFACTURING AND DETAILS ARE AS BELOW Unit Produced = $                       91,000 Units Unit Sold = $                       82,000 Units Closing Stock $                          9,000 Units Selling Price Per unit $                          25.75 Per Units Variable Selling Expenses p.U $                            4.02 Per Units Fixed Selling and administration Expenses $                    2,16,403 STEP : 1 CALCULATION OF FIXED OVERHEAD RECOVERY RATE FOR ABSORPTION COSTING Fixed Manufacturing Overhead = $                    2,34,780 "/ " By Units Produced = $                       91,000 Fixed overhead recovery Rate = $                            2.58 STEP : 2 CALCUALTION OF cost of production units by using absorption and variable Costing Particulars Absorption Costing Amount Variable Costing Amount Direct Material Per unit $                            7.73 $                            7.73 Direct Labour Per Unit $                            3.55 $                            3.55 Vairable Manufacturing Overhead $                            5.97 $                            5.97 Fixed Manufacturing Overhead ($234,780 / 91,000 units) $                            2.58 Cost of Production per unit $                          19.83 $                          17.25 STEP 3: Absorption Costing ABOSRPTION COSTING INCOME STATEMENTS Absorption Costing Particulars Amount Sales (82,000 Units X 25.75 Per Units) $                 21,11,500 Cost of Goods Sold Beginning inventory $                                 -   Cost of Goods Manufactured (91,000 Units X $ 19.83 Per unit) $                 18,04,530 Less: Ending Inventory (9,000 units $ 19.83 Per Unit) $                    1,78,470 Cost of Goods Sold $                 16,26,060 Gross Profit $                    4,85,440 Less : Selling Expenses Fixed Selling Expenses $                    2,16,403 Variable Selling Expenses(82,000 units * 4.02) $                    3,29,640 Net Income $                      -60,603 STEP 4: VARIABLE COSTING INCOME STATEMENTS Variable Costing Particulars Amount Sales (82,000 Units X 25.75 Per Units) $                 21,11,500 Cost of Goods Sold Beginning inventory $                                 -   Cost of Goods Manufactured (91,000 Units X $ 17.25 Per unit) $                 15,69,750 Less: Ending Inventory (9,000 units $ 17.25 Per Unit) $                    1,55,250 Cost of Goods Sold $                 14,14,500 Selling Expenses (82000 Units * $ 4.02) $                    3,29,640 Gross Profit $                    3,67,360 Less: Fixed Manufacturing overhead $                    2,34,780 Less : Fixed Selling Expenses $                    2,16,403 Net Income $                      -83,823

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