Question

Writer One Inc. manufactures ball point pens that sell at wholesale for $0.80 per unit. Budgeted...

Writer One Inc. manufactures ball point pens that sell at wholesale for $0.80 per unit. Budgeted production in both 2018 and 2019 was 15,500 units. There was no beginning inventory in 2018. The following data summarized the 2018 and 2019 operations:

2018 2019
Units sold 14,000 11,500
Units produced 15,500 12,500
Costs:
Variable factory overhead per unit $ 0.15 $ 0.15
Fixed factory overhead $ 3,100 $ 2,500
Variable marketing per unit $ 0.30 $ 0.30
Fixed Selling and Administrative $ 320 $ 320

Full costing operating income for 2018 is calculated to be: (Do not round intermediate calculations. Round your final answers to whole dollar amounts.)

Business   Accounting   
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Answer #1

Solution:

Sales (14000*$0.80) $11,200
Less: Cost of Factory overheads:
     Variable factory overhead (14000*0.15) $2,100
     Fixed factory overhead (3100/15500*14000) $2,800 $4,900
Gross profit $6,300
Less: Other operating costs:
      Variable marketing (14000*0.30) $4,200
      Fixed Selling and Administrative $320 $4,520
Full costing operating Income $1,780
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