Question

During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....

During 2021, its first year of operations, XYZ Company produced 25,000
units and sold 19,000 units. During 2022, XYZ Company produced 30,000
units and sold 32,000 units. The following information was taken from
XYZ's accounting records for 2021 and 2022:

                                               2021            2022
Direct materials cost per unit ............    $18             $17
Direct labor cost per unit ................    $16             $21
Variable overhead cost per unit ...........    $7              $9
Variable selling & admin cost per unit ....    $4              $6
Fixed overhead (total cost) ...............    $105,000        $144,000
Fixed selling & admin (total cost) ........    $88,000         $96,000

Assume the selling price of XYZ Company's product was $64 per unit for
both years.

Calculate XYZ Company's 2022 cost of goods sold using variable costing.
Assume XYZ Company employs a weighted average inventory cost flow assumption.

Homework Answers

Answer #1
Cost of goods sold in year 2022 = $1,462,600

Working:

2021 2022
Particulars Cost per unit Total Cost per unit Total
Units Produced 25000 units 30000 units
Direct Material cost $18 $450000 $17 $510000
Direct Labor Cost 16 400000 21 630000
Variable overhead cost 7 175000 9 270000
Fixed Overhead Cost 105000 144000
Total Cost of goods produced 1130000 1554000
Add: Beginning Inventory 0 0 6000 units 271200
Cost of goods available for sales 25000 units 1130000 36000 units 1825200
Less: Closing Stock  

6000 units

(25000-19000)

$271200

(1130000/25000*6000)

2000

(32000-30000)

101400

(1825200/36000*2000)

Cost of goods sold $858,800 $1,452,600

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