Question

Columbia Products produced and sold 1,200 units of the company’s only product in March. You have collected the following information from the accounting records:

Sales price (per unit)	$	130
Manufacturing costs:
Fixed overhead (for the month)		12,000
Direct labor (per unit)		10
Direct materials (per unit)		33
Variable overhead (per unit)		24
Marketing and administrative costs:
Fixed costs (for the month)		16,800
Variable costs (per unit)		3

  

a. Compute the following:

  

a. Compute the following:

  

a. Compute the following:

  

1.	Variable manufacturing cost per unit.
2.	Full cost per unit.
3.	Variable cost per unit.
4.	Full absorption cost per unit.
5.	Prime cost per unit.
6.	Conversion cost per unit.
7.	Profit margin per unit.
8.	Contribution margin per unit.
9.	Gross margin per unit.

Answer 1

Sollutio:- 1)Variable manufacturing cost per unit:-

= Direct material + direct labor + variable overhead

= 33+10+24

=$67 per unit.

2)Full cost per unit:-

= 33+10+24+3+(12000+16800)/1200

= $94 per unit.

3)Variable cost per unit

= 33+10+24+3

= $70 per unit

4)Full Absorption cost:-

= Variable manufacturing cost + fixed overhead per unit

= 67+12000/1200

= $77 per unit.

5)Prime cost:-

= Material + labor

= 33+10

= $43 per unit.

6)Conversion cost per unit:-

= Labor cost + manufacturing overhead

= 10+24+12000/1200

= $44 per unit.

  7)Profit margin per unit :-

= selling price per unit-total cost per unit

   =130-94(calculated in sollution2)

= $36per unit.

8)CM per unit:-

= Sales price – variable costs

= 130 – 70

= $60 per unit

9)Gross margin:-

= Sales – cost of goods sold

= 130-77

= $53 per unit