Jimmy produces a specialty statue item. The following information has been provi

Question

Jimmy produces a specialty statue item. The following information has been provided by management:

Actual sales                                                                 10,000 units

Budgeted production                                               12,000 units

Selling price                                                              $425 per unit

Direct material costs                                           $87.50 per unit

Fixed manufacturing costs                               $62.50 per unit

Variable manufacturing costs                          $50.00 per unit

Variable administrative costs                          $25.00 per unit

Required:

a.     What is the cost per statue if absorption costing is used?

b.     What is the cost per statue if "super-variable costing" is used?

c.     What is the total throughput contribution?

Explanation / Answer

Solution.

Note: We have assumed that all the budgeted units have been actually produced.

a. Using absorption costing:

b. Using Super variable costing:

c. Total throughput contribution = Total Revenue - Cost of goods sold (by throughput/super-variable method)

= (10000*425) - 875000 = $3375000

Direct Material costs (87.50*12000) $1050000 Fixed Manufacturing Costs (62.50*12000) $750000 Variable Manufacturing costs (50*12000) $600000 Cost of goods available for sale $2400000 Less: Ending Inventory (2400000/12000)*2000 ($400000) Costs of goods sold $2000000 Cost per Statue (2000000/10000) $200

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

---

---

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