During the first year of operations, 18,000 units were manufactured and 13,500 u

Question

During the first year of operations, 18,000 units were manufactured and 13,500 units were sold.  On August 31, Olympic Inc. prepared the following income statement based on the variable costing concept:

Olympic Inc.
Variable Costing Income Statement
For Year Ended August 31, 20--

$297,000

$288,000

    72,000

216,000

$  81,000

    40,500

$  40,500

$ 12,000

   10,800

    22,800

$  17,700

?

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

Olympic Inc.
Variable Costing Income Statement
For Year Ended August 31, 20--

Sales

$297,000

Variable cost of goods sold:   Variable cost of goods manufactured

$288,000

  Less ending inventory

    72,000

  Variable cost of goods sold

216,000

Manufacturing margin

$  81,000

Variable selling and administrative expenses

    40,500

Contribution margin

$  40,500

Fixed costs:   Fixed manufacturing costs

$ 12,000

  Fixed selling and administrative expenses

   10,800

    22,800

Income from operations

$  17,700

Explanation / Answer

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

Variable costing concept = 288000/18000 = 16 per unit

Absorption costing concept = (288000+12000)/18000 = 16.67 per unit

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

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