Question

Problem 5-1 Richetti Electronics produces a wireless home lighting device that allows consumers to turn on home lights from their cars and light a path into and through their homes. Information on the first three years of business is as follows: Total 72,000 72,000 Units sold Units produced Fixed production costs Variable production costs per unit Selling price per unit Fixed selling and administrative expense 2017 24,000 24,000 $1,020,000 $157 $237 $226,800 2018 24,000 30,000 $1,020,000 $157 $237 $226,800 2019 24,000 18,000 $1,020,000 $157 $237 $226,800 Calculate profit and the value of ending inventory for each year using full costing. (Round cost per unit to 2 decimal places, e.g. and final answers to o decimal places, e.g. 125.) 2017 2018 2019 Net profit Ending inventory s LINK TO TEXT LINK TO TEXT Calculate profit and the value of ending inventory for each year using variable costing. 2017 2018 2019 Net profit Ending inventory s Click if you would like to Show Work for this question: Open Show Work xro

Answer 1

Full Costing

	2017	2018	2019
Fixed production cost per unit	$              42.50	$            34.00	$           56.67
Variable Production cost per unit	$            157.00	$          157.00	$         157.00
Total Production cost per unit	$            199.50	$          191.00	$         213.67
Sales Revenue	$       56,88,000	$     56,88,000	$    56,88,000
Cost of Goods Sold
Beginning Inventory	$                     -	$                   -	$    11,46,000
Cost of Goods Produced	$       47,88,000	$     57,30,000	$    38,46,000
Cost of Goods Available for sale	$       47,88,000	$     57,30,000	$    49,92,000
Less Ending Inventory	$                     -	$    11,46,000	$                  -
Cost of Goods SOld	$       47,88,000	$     45,84,000	$    49,92,000
Gross Profit	$         9,00,000	$     11,04,000	$      6,96,000
Selling and administrative expenses	$         2,26,800	$       2,26,800	$      2,26,800
Net Income	$         6,73,200	$      8,77,200	$      4,69,200

Variable Costing

	2017	2018	2019
Variable Production cost per unit	$            157.00	$          157.00	$             157.00
Sales Revenue	$       56,88,000	$     56,88,000	$        56,88,000
Variable Cost of Goods Sold
Beginning Inventory	$                     -	$                   -	$          9,42,000
Cost of Goods Produced	$       37,68,000	$     47,10,000	$        28,26,000
Cost of Goods Available for sale	$       37,68,000	$     47,10,000	$        37,68,000
Less Ending Inventory	$                     -	$      9,42,000	$                      -
Cost of Goods SOld	$       37,68,000	$     37,68,000	$        37,68,000
Contribution Margin	$       19,20,000	$     19,20,000	$        19,20,000
Fixed Production Costs	$       10,20,000	$     10,20,000	$        10,20,000
Fixed Selling and administrative expenses	$         2,26,800	$       2,26,800	$          2,26,800
Net Income	$         6,73,200	$      6,73,200	$          6,73,200