Kelley Industries makes high-performance swimwear for triathletes. Kelley\'s man
ID: 2564752 • Letter: K
Question
Kelley Industries makes high-performance swimwear for triathletes. Kelley's manufacturing costs for the production of 100,000 swimsuits were as follows:
Total Manufacturing Cost for 100,000 units:
Direct Materials: $1,800,000
Direct Labor: $375,000
Variable MOH: $250,000
Fixed MOH: $300,000
TOTAL COST: $2,725,000
Requirement 1. Calculate the product cost per unit using 1) absorption costing and 2) variable costing. Requirement 2. Begin by selecting the formula used to determine the change in operating income. Then enter the amounts and calculate the difference in operating income.
$? x $? = Difference in operating income
Explanation / Answer
1. Product cost per unit using 1) absorption costing and 2) variable costing
2. Formula used to determine the change in operating income is Units produced * fixed manufacturing cost per unit
100,000*3 = 300,000
Absorption Costing Cost of goods sold: Per unit Cost Total Cost of sales Direct Material 100,000 18.00 1,800,000 Direct Labour 100,000 3.75 375,000 Variable manufacturing overhead 100,000 2.50 250,000 Annual fixed manufacturing overhead 100,000 3.00 300,000 Unit Product Cost 27.25 2,725,000 Variable Costing Cost of goods sold: Per unit Cost Total Cost of sales Direct Material 100,000 18.00 1,800,000 Direct Labour 100,000 3.75 375,000 Variable manufacturing overhead 100,000 2.50 250,000 Unit Product Cost 24.25 2,425,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.