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 1,700 units and sold 1,500 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			$465,000
Variable cost of goods sold:
Variable cost of goods manufactured	$253,300
Inventory, December 31	(29,800)
Total variable cost of goods sold			223,500
Manufacturing margin			$241,500
Total variable selling and administrative expenses			55,500
Contribution margin			$186,000
Fixed costs:
Fixed manufacturing costs	$115,600
Fixed selling and administrative expenses	37,500
Total fixed costs			153,100
Income from operations			$32,900

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

Compuation of Unit Cost of Goods Manufactured- Variable Costing
	$
Variable cost of Goods Manufactured (a)	$253,300.00
No. of Unit Produced (b)	1,700.00
Unit cost of Goods Manufactured (a/b)	$149.00
Compuation of Unit Cost of Goods Manufactured- Absorption Costing
	$
Variable cost of Goods Manufactured (a)	$253,300.00
Fixed Manufacturing Cost (b)	115600
Total Cost of Goods Manufactured (c=a+b)	$368,900.00
No. of Unit Produced (d)	1,700.00
Unit cost of Goods Manufactured (c/d)	$217.00

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