Alpha company manufactures and sells two products: Product A and Product B . The
ID: 2555347 • Letter: A
Question
Alpha company manufactures and sells two products: Product A and Product B. The following costs were incurred during the company’s first year of operations:
Variable cost per unit:
Product A
Product B
Direct materials
$7
$6
Direct labor
$9
$7
Variable manufacturing overhead
$4
$7
Variable selling and administrative cost
$5
$3
Fixed cost per year:
Fixed manufacturing overhead
$320,000
$270,000
Fixed selling and administrative cost
$210,000
$150,000
During the year, the company produced 27,000 units of product A and sold 23,000 units and produced 18,000 units of product B and sold 17,000 units.
The selling price of product A and B is respectively: $72 and 67 per unit.
Required:
1.Compute the unit product cost of Product A and Product B.
2.Compute the profit per product (Product A and Product B).
Variable cost per unit:
Product A
Product B
Direct materials
$7
$6
Direct labor
$9
$7
Variable manufacturing overhead
$4
$7
Variable selling and administrative cost
$5
$3
Fixed cost per year:
Fixed manufacturing overhead
$320,000
$270,000
Fixed selling and administrative cost
$210,000
$150,000
Explanation / Answer
Solution 1:
It is assumed that company is using variable costing to accounts for cost and profit.
Solution 2:
Computation of unit product cost Particulars Product A Product B Direct Material $7.00 $6.00 Direct labor $9.00 $7.00 Variable manufacturing overhead $4.00 $7.00 Unit Product Cost $20.00 $20.00Related Questions
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