Question

The Atalia Corp. sells bicycle helmets for $56 each. The variable manufacturing costs per unit total...

The Atalia Corp. sells bicycle helmets for $56 each. The variable manufacturing costs per unit total $20 per unit (direct material, direct labor and manufacturing overhead). The total fixed manufacturing overhead is $15,000. For selling and administrative costs, variable S&A is $1 per unit and fixed S&A is $25,000. Atalia produced 5,000 units and sold 4,000 units.

The absorption costing NOI is _________, and the variable costing NOI is _________

Homework Answers

Answer #1

Income Statement

Absorption Costing

Sales($56*4000 units) $224,000

Less: Cost of Good Sold

($23#1*4000 units)

$92,000
Gross Profit $132,000

Less:Variable selling & Adm. Expenses

($1*4000 units)

$4000
Less:Fixed selling & Adm.Expenses $25,000
Net Operating Income (NOI) $103,000

#1 Product Cost per unit= Variable Manufacturing Cost per unit + Fixed manufacturing overhead per unit

= $20 + ($15,000/5000 units)

=$20 + $3

=$23

Income statement

Variable Costing Income Statement

Sales($56 * 4000) $224,000

Less: Variable Cost of Good Sold

($21#2 * 4000 units )

$84,000
Contribution margin $140,000
Less:Fixed Manufacturing overhead $15000
Less:Fixed Selling & Adm. Expenses $25,000
Net Operating Income (NOI) $100,000

#2Total Variable Cost Per unit= Variable Manufacturing Cost per unit + Variable Sell.&Adm.Expenses

=$20+$1

=$21

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