Dmitry makes a single product, the widget. Information for 9,600 units produced
ID: 2456557 • Letter: D
Question
Dmitry makes a single product, the widget. Information for 9,600 units produced and sold during 2016 appears below:
Variable production cost per unit $3.17
Variable selling cost per unit $0.34
Fixed production cost per year $81,600
Fixed selling and administrative cost per year $40,800
Selling price per unit $12.00
How much is the total product cost to be reported on Dmitry’s income statement using variable costing?
How much is the product cost per unit using absorption costing?
Explanation / Answer
Statement showing computations under Variable Costing Particulars Amount Sales = 12*9600 115,200.00 Variable Costs: Variable production cost pu =3.17*9600 30,432.00 Variable Selling cost pu = .34*9600 3,264.00 Total Variable Costs 33,696.00 Contribution 81,504.00 Fixed Costs Fixed prod cost 81,600.00 Fixed selling and admin 40,800.00 Total Fixed Costs 122,400.00 Income = Cont - FC (40,896.00) Total Costs = FC + VC = 33696 + 122400 156,096.00 Costs per unit = 156,096/9600 16.26 Statement showing computations under Absorption Costing Particulars Amount Variable production cost pu =3.17*9600 30,432.00 Fixed prod cost 81,600.00 Total Cost of goods sold 112,032.00 Variable Selling cost pu = .34*9600 3,264.00 Fixed selling and admin 40,800.00 Cost of Sales 156,096.00 Sales = 12*9600 115,200.00 Profit 40,896.00 Costs per unit = 156,096/9600 16.26
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