Burns Company incurred the following costs during the year: direct materials $24
ID: 2757733 • Letter: B
Question
Burns Company incurred the following costs during the year: direct materials $24.10 per unit; direct labor $16.70 per unit; variable manufacturing overhead $19.50 per unit; variable selling and administrative costs $9.00 per unit; fixed manufacturing overhead $126,000; and fixed selling and administrative costs $13,000. Burns produced 7,875 units and sold 6000 units.
Determine the manufacturing cost per unit under (a) absorption costing and (b) variable costing. (Round answers to 2 decimal places, e.g. 52.75.)
Manufacturing cost
Manufacturing cost
(a) Absorption Costing$
(b) Variable Costing$
Explanation / Answer
Absorption costing
Total variable cost per unit = 24.10 + 16.70 + 19.50 + 9
= 69.30
Total fixed cost = 126000+13000
= 139,000
Fixed cost per unit of production = 139000/ 7875
= 17.65
Cost per unit = 69.30+17.65
= 86.95
Variable costing
Total variable cost per unit = 24.10 + 16.70 + 19.50 + 9
= 69.30
Total fixed cost = 126000+13000
= 139,000
Fixed cost per unit of sale = 139000/ 6000
= 23.17
Cost per unit = 69.30+23.17
= 92.47
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