Cost of Goods Manufactured, using Variable Costing and Absorption Costing On December 31, the end of...

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Cost of Goods Manufactured, using Variable Costing and Absorption Costing On December 31, the end of...

Cost of Goods Manufactured, using Variable Costing and Absorption Costing

On December 31, the end of the first year of operations, Frankenreiter Inc., manufactured 6,300 units and sold 5,400 units. The following income statement was prepared, based on the variable costing concept:

Frankenreiter Inc. Variable Costing Income Statement For the Year Ended December 31, 20Y1
Sales		$1,620,000
Variable cost of goods sold:
Variable cost of goods manufactured	$907,200
Inventory, December 31	(129,600)
Total variable cost of goods sold		777,600
Manufacturing margin		$842,400
Total variable selling and administrative expenses		194,400
Contribution margin		$648,000
Fixed costs:
Fixed manufacturing costs	$415,800
Fixed selling and administrative expenses	129,600
Total fixed costs		545,400
Income from operations		$102,600

Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.

Variable costing	$
Absorption costing	$

business accounting

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Answer 1

Answer #1

Variable Costing (Units cost ) = Variable cost of Goods Manufactures / Units Produced

907,200/6,300 = $144 (Answer)

Absorption Costing (Units Cost) =(Variable Cost of Goods Manufactures + Fixed MOH) / units Produced

(907200+415800)/6300 = $ 210 (Answer)

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Answer 2

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