Use the following to answer questions 14 and 15: Quasimodo Company produces and

Question

Use the following to answer questions 14 and 15: Quasimodo Company produces and sells only one product. The following data relates to Quasimodo's operations for the year just ended: Selling price per unit.... $121 Units in beginning finished goods inventory. Units produced Units sold 4,300 4,000 300 Units in ending finished goods inventory. Variable costs per unit: $44 $35 $7 $5 Variable manufacturing overhead Variable selling and administrative. Fixed costs: Fixed selling and administrative. $34,400 $72,000

Explanation / Answer

Answer 1 Operating Income under Variable Costing Sales [4000 units * $121] $484,000.00 Less : Variable Costs - Cost of goods sold [4000 units * $86] $344,000.00 - Selling and administrative expenses [4000 units * $5] $20,000.00 Contribution Margin $120,000.00 Less : Fixed Cost - Manufacturing Overheads $34,400.00 - Selling and administrative expenses $72,000.00 Operating Income under Variable Costing $13,600.00 Per unit cost of goods sold under variable costing is as under Direct Material $44.00 Direct Labour $35.00 Variable Manufacturing Overhead $7.00 Per Unit cost of good sold $86.00 Answer 2 Operating Income under Absorption Costing Sales [4000 units * $121] $484,000.00 Less : Cost of goods sold [4000 units * $94] $376,000.00 Gross Margin $108,000.00 Less : Selling and administrative expenses - Variable $20,000.00 - Fixed $72,000.00 Operating Income under Absorption Costing $16,000.00 Per unit cost of goods sold under absorption costing is as under Direct Material $44.00 Direct Labour $35.00 Variable Manufacturing Overhead $7.00 Fixed Manufacturing Overheads [$34400/4300 units] $8.00 Per Unit cost of good sold $94.00

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