The following information is available for Captain Spa, a manufacturer of above-
ID: 2503540 • Letter: T
Question
The following information is available for Captain Spa, a manufacturer of above-ground spa kits:
2011 2012 Total
Units produced 20,000 16,000 36,000
Units sold 18,000 18,000 36,000
Selling price per unit $8,000 $8,000
Direct material per unit $1,600 $1,600
Direct labor per unit $3,000 $3,000
Variable manufacturing overhead per unit $600 $600
Fixed manufacturing overhead per year $4,800,000 $4,800,000
Fixed selling and administrative expense per year $3,000,000 $3,000,000
In its first year of operation, the company produced 20,000 units, but was only able to sell 18,000 units. In its second year, the company needed to get rid of excess inventory (the extra 2,000 units produced but not sold in 2011) so it cut back production to 16,000 units.
Calculate profit for both years using full costing.
Explanation / Answer
STATEMENT SHOWING PROFIT USING FULL COSTING:-
PARTICULARS
2011
2012
SALES
(18000*8000)
= 144000000
(18000*8000)
= 144000000
LESS:-VARIABLE COST
[20000*(1600+3000+600)]
=(104000000)
[16000*(1600+3000+600)]
=(83200000)
LESS:- FIXED COST
(4800000+3000000)
= (7800000)
(4800000+3000000)
= (7800000)
PROFIT
32200000
53000000
STATEMENT SHOWING PROFIT USING FULL COSTING:-
PARTICULARS
2011
2012
SALES
(18000*8000)
= 144000000
(18000*8000)
= 144000000
LESS:-VARIABLE COST
[20000*(1600+3000+600)]
=(104000000)
[16000*(1600+3000+600)]
=(83200000)
LESS:- FIXED COST
(4800000+3000000)
= (7800000)
(4800000+3000000)
= (7800000)
PROFIT
32200000
53000000
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