Question

19 Homework W Required information Exercise 19-9 Income statement under absorption costing and variable costing LO P1, P2 [The 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 44,000 units and sold 36,000 units at a price of $140 per unit. . Manufacturing costs Direct materials per unit Direct later per unit Variable overhead per unit Fixed Overhead for the year Selling and administrative costs Variable selling and administrative cost per unit Fixed selling and dinistrative cost per year Tee Exercise 19-9 Part 20 References 20. Assume the company uses variable costing. Determine its product cost per unit. Per un product costsing Variable costing

Answer 1

WORKING NOTES:
	CALCULATION OF CLOSING STOCK
	Opening Stock =	0	Units
	Add: Production =	44000	Units
	Less: Sales	36000	Units
	Closing Stock	8000	Units
	Caclulation of Unit Cost of Production by using Variable Costing
	Particulars	Amount
		Cost per Unit	Units	Total Cost
	Driect Material	$                60.00	44,000	$ 26,40,000.00
	Direct Labour	$                22.00	44,000	$    9,68,000.00
	Variable overhead	$                  8.00	44,000	$    3,52,000.00
	Total Manufacturing Variable Cost	$                90.00		$ 39,60,000.00
	CALCULATION OF VALUE OF CLOSING STOCK FOR 8000 Units
	Closing Stock Value = (8000 units * $ 90.00)	$    7,20,000.00
SOLUTION:
	VARIABLE COSTING INCOME STATEMENT
		Per unit Cost	Amount
	Sales (36,000 units X $ 140)		$       50,40,000
	Less: Variable Cost of Goods Sold
	Beginning inventory	$                       -
	Add: Vriable Cost of Goods Manufactured (44,000 units X $ 90)	$       39,60,000
	Ending inventory (8,000 units X $ 90)	$          7,20,000
	Total Variable Cost of Goods Sold		$       32,40,000
	Manufacturing Margin		$       18,00,000
	Less: Variable Sellign and administration expenses (36,000 X $ 11)		$          3,96,000
	Contribution margin		$       14,04,000
	Fixed Cost
	Fixed Manufacturing Cost	$          5,28,000
	Fixed Selling and adminsitration expenses	$          1,05,000
	Total Fixed Cost		$          6,33,000
	Net Income		$          7,71,000