Bell Company manufactures and sells a single product. Cost data for the product

Question

Bell Company manufactures and sells a single product. Cost data for the product follow

Bell Company manufactures and sells a single product. Cost data for the product follow

Variable costs per unit: Direct materials Direct labor Variable factory overhead Variable selling and administrative 10.5 42 10.5 10.5 Total variable costs per unit 73.5 Fixed costs per month Fixed manufacturing overhead Fixed selling and administrative S 912,000 592,000 Total fixed cost per month S 1,504,000 The product sells for $168 per unit. Production and sales data for May and June, the first two months of operations, are as follows Units Produced 24,000 24,000 nits Sold 20,000 28,000 May June Income statements prepared by the accounting department, using absorption costing, are presented below May June Sales Cost of goods sold $ 3,360,000 4,704,000 2,828,000 2,020,000 Gross margin Selling and administrative expenses 1,340,000 802,000 1,876,000 886,000 Net operating income $ 538,000 $ 990,000 Required 1. Determine the unit product cost under absorption costing and variable costing Unit Product Cost Absorption costing Variable costing

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Computation of Unit Product Cost - Variable Costing Particulars Amount Unit Product Cost: Direct material $10.50 Direct Labor $42.00 Variable manufacturing overhead $10.50 Unit Product Cost $63.00

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