Question

Cost of Goods Manufactured, using Variable Costing and Absorption Costing

On December 31, the end of the first year of operations, Frankenreiter Inc., manufactured 4,200 units and sold 3,600 units. The following income statement was prepared, based on the variable costing concept:

Frankenreiter Inc. Variable Costing Income Statement For the Year Ended December 31, 20Y1
Sales			$1,584,000
Variable cost of goods sold:
Variable cost of goods manufactured	$886,200
Inventory, December 31	(126,600)
Total variable cost of goods sold			759,600
Manufacturing margin			$824,400
Total variable selling and administrative expenses			190,800
Contribution margin			$633,600
Fixed costs:
Fixed manufacturing costs	$407,400
Fixed selling and administrative expenses	126,000
Total fixed costs			533,400
Income from operations			$100,200

Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.

Variable costing	$
Absorption costing	$

Answer 1

Answer:- Answer:- a)

Unit fixed manufacturing overhead= fixed manufacturing overhead/No. of units produced

=$533400/4200 units =$127 per unit

Unit product cost under Absorption costing:-Direct materials + Direct Labor+Variable manufacturing overhead + fixed manufacturing overhead

=(Variable cost of goods manufactured/Units produced) + fixed manufacturing overhead

=($886200/4200 units)+$127

=$211+$127 =$338 per unit

2)-Unit product cost under variable costing:-Direct materials + Direct Labor+Variable manufacturing overhead

=(Variable cost of goods manufactured/Units produced)

=($886200/4200 units)

=$211 per unit