Ross Corporation manufactures and sells one product. The following information p
ID: 2597534 • Letter: R
Question
Ross Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: Variable costs per unit: Direct materials $81 Fixed costs per year Direct labor $1,008,000 Fixed manufacturing overhead $2,520,000 Fixed selling and administrative $1,440,000 The company does not have any variable manufacturing overhead costs or variable selling and administrative costs. During its first year of operations, the company produced 36,000 units and sold 30,000 units. There was no ending work-in-process inventory. The company's only product is sold for $251 per unit.
14.1What is the unit product cost under super-variable costing?
14.2 What is the net operating income under super-variable costing?
14.3Assume that the company uses a variable costing system that assigns $28 of direct labor cost to each unit that is produced. How much higher or lower is variable costing income compared to that under super-variable costing?
14.4 Assume that the company uses an absorption costing system that assigns both direct labor and fixed manufacturing costs to each unit that is produced. What is the unit product cost under this costing system?
PLEASE SOLVE STEP BY STEP. I DO NOT UNDERSTAND.
Explanation / Answer
14.1) Unit product cost under super variable costing = 81 per unit
14.2) Calculate net operating income under super variable costing :
14.3) Calculate net operating income under variable costing :
Net operating income is higher under variable costing by $168000
14.4) Unit product cost under absorption costing ;
Sales (30000*251) 7530000 Variable cost (30000*81) 2430000 Contribution margin 5100000 Direct labour 1008000 Fixed manufacturing overhead 2520000 Fixed selling and administrative expense 1440000 4968000 Net operating income 132000Related Questions
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