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ts Componeatc orirgi cost accountant has provided you wit (LA Larcker Manufactur

ID: 2329606 • Letter: T

Question

ts Componeatc orirgi cost accountant has provided you wit (LA Larcker Manufacturing's cost accountant has provided you with the following information for January operations: $135,000 Sales price . . . . . . . . . . . . .. . . . . . . . . .. . . . . . ..$79 per unit Variable manufacturing overhead. . . . . . . _ . . . . . . $12 per unit $24 per unit $117,000 30,000 Variable marketing and administrative costs... . . . . . ..$5 per unit Direct labor .. . . Fixed marketing and administrative costs.... . . . Required Determine each of the following: a. Variable cost b. Variable manufacturing cost. c Full absorption cost d. Full cost. e. Profit margin. Gross margin. & Contribution margin.

Explanation / Answer

a. Variable cost per unit = $21.00 + $24.00 + $12.00 + $5.00 = $62.00

b. Variable manufacturing cost per unit = $21.00 + $24.00 + $12.00 = $57.00

c. Full­ absorption cost per unit = $21.00 + $24.00 + $12.00 + ($135,000 ÷ 30,000 units) = $61.50

d. Full cost per unit = $21.00 + $24.00 + $12.00 + ($135,000 ÷ 30,000 units) + $5.00 + ($117,000 ÷ 30,000 units) = $70.40

e. Profit margin per unit = Sales price – Full cost = $79.00 – $70.40 = $8.60

f. Gross margin per unit = Sales price – Full absorption cost = $79.00 – $61.50 = $17.50

g. Contribution margin = Sales price – variable cost = $79.00 – $62.00 = $17.00