Shadowlands Inc. produces venetian blinds for homes and business. They reported

Question

Shadowlands Inc. produces venetian blinds for homes and business. They reported the following financial information for the previous period Direct Materials Direct Labor 3,000 units used (purchased at S50/unit) 200 hrs/employee; 15 employees each paid at $20/hr Production Manager Salary Accounting Manager Salary Factory Rent Administration Building Rent Factory Utilities (variable cost) Equipment Depreciation (fixed cost) Equipment Maintenance (variable cost) $6,000 $5,000 $15,000 $1,500 $4,000 $1,500 5500 Total units produced in the period 1,500 2. What is the per-unit cost of inventory produced under absorption costing? 3. What is the per-unit cost of inventory produced under variable costing?

Explanation / Answer

Note :

Fixed manufacturing overhead = Production Manager Salary + Factory Rent + Equipment Depreciation

=  $6,000 + $15,000 + $1,500 = $22,500 ; Per unit cost = $22,500 / 1,500 units = $15

Variable manufacturing overhead = Factory Utilities + Equipment Maintenance

= $4,000 + $500 = $4,500  ; Per unit cost = $4,500 / 1,500 units = $3.

Direct material per unit = (3,000 units * $50 per unit) / 1,500 units = $100

Direct Labour per unit = (200 hrs * 15 emps* $20 per hour) / 1,500 units = $40

Answer 2

Per-unit cost of inventory produced under absorption costing

Answer 3

Per-unit cost of inventory produced under variable costing

Particular Amount ($) Direct Materials 100 Direct Labor 40 Variable manufacturing overhead 3 Fixed manufacturing overhead 15 Per-unit cost of inventory produced under absorption costing $158

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