Question

Larcker Manufacturing's cost accountant has provided you with the following information for January operations: Direct materials...

Larcker Manufacturing's cost accountant has provided you with the following information for January operations: Direct materials $ 34 per unit Fixed manufacturing overhead costs $ 225,000 Sales price $ 195 per unit Variable manufacturing overhead $ 19 per unit Direct labor $ 25 per unit Fixed marketing and administrative costs $ 195,000 Units produced and sold 5,500 Variable marketing and administrative costs $ 9 per unit b. Determine the variable manufacturing cost per unit. c. Determine the full absorption cost per unit. (Round your answer to 2 decimal places.) d. Determine the full cost per unit. (Round your answer to 2 decimal places.) e. Determine the profit margin per unit. (Round intermediate calculations and final answer to 2 decimal places.) f. Determine the gross margin per unit. (Round intermediate calculations and final answer to 2 decimal places.) g. Determine the contribution margin per unit.

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Answer #1

Solution:

a. Determine the variable cost per unit.

= $34 + $19 + $25 + $9

= $87

.

b. Determine the variable manufacturing cost per unit.

= $34 + $19 + $25

= $78

.

c. Determine the full absorption cost per unit.  

Fixed manufacturing OH cost = 225,000 / 5,500 = 40.90

= $34 + $19 + $25 + $40.90

= $118.90

.

d. Determine the full cost per unit.  

Fixed marketing and administrative costs = 195,000 / 5,500 = 35.45

= $118.90 + $9 + $35.45

= $163.35

.

e. Determine the profit margin per unit.  

= sales prices - Full cost

= $195 - $163.35

= $31.65

.

f. Determine the gross margin per unit.  

= sales price - Full absorption cost

= $195 - $118.90

= $76.10

g. Determine the contribution margin per unit.

= sales price - variable cost

= $195 - $87

= $108

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