The following information is available for Skipper Pools, a manufacturer of abov

Question

The following information is available for Skipper Pools, a manufacturer of above-ground swimming pool kits:

In its first year of operation, the company produced 11,160 units but was able to sell only 10,000 units. In its second year, the company needed to get rid of excess inventory (the extra 1,160 units produced but not sold in 2014), so it cut back production to 8,840 units.

2014 2015 Total Units produced 11,160 8,840 20,000 Units sold 10,000 10,000 20,000 Selling price per unit $4,020 $4,020 Direct material per unit $830 $830 Direct labor per unit $1,600 $1,600 Variable manufacturing overhead per unit $307 $307 Fixed manufacturing overhead per year $2,388,240 $2,388,240 Fixed selling and administrative expense per year $1,522,200 $1,522,200

Explanation / Answer

FULL COSTING 2014

*

DIRECT MATERIAL = $830

DIRECT LABOUR = $1600

VARIABLE MANUFACTURING OVERHEAD = $307

FIXED MANUFACTURING OVERHEAD ($2388240 / 11160) = $214

MANUFACTURING COST PER UNIT = $2951

VARIABLE COSTIN 2014

*

DIRECT MATERIAL = $830

DIRECT LABOUR = $1600

VARIABLE MANUFACTURING OVERHEAD = $307

MANUFACTURING COST PER UNIT = $2737

--------------------------------------------------------------------------------------------------------------------------------------------------------------------

FULL COSTING 2015

*

DIRECT MATERIAL = $830

DIRECT LABOUR = $1600

VARIABLE MANUFACTURING OVERHEAD = $307

FIXED MANUFACTURING OVERHEAD ($2388240 / 8840) = $270

MANUFACTURING COST PER UNIT = $3007

VARIABLE COSTIN 2014

*

DIRECT MATERIAL = $830

DIRECT LABOUR = $1600

VARIABLE MANUFACTURING OVERHEAD = $307

MANUFACTURING COST PER UNIT = $2737

SALES (10000 * $4020) $40200000 LESS COST OF GOODS SOLD BEGINNING INVENTORY NIL COST OF GOODS MANUFACTURED* (11160 * $2951) $32933160 COST OF GOODS AVAILABLE FOR SALE $32933160 ENDING INVENTORY (1160 * $2951) ($3423160) $29510000 GROSS PROFIT $10690000 LESS SELLING AND ADMIN EXPENSES $1522200 NET OPERATING INCOME $9167800

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.