Ch 6 & 8HW 2 1 Addison, Inc. makes a si 3 Selling price per fireplace 5 Variable

Question

Ch 6 & 8HW 2 1 Addison, Inc. makes a si 3 Selling price per fireplace 5 Variable per unit produced: 7Direct labor oor $420 8 $135 $43 8 044058) Variable manufacturing overhead 9 Fixed $210,000 10 Selling and administrative expenses: 11 Variable per unit sold $190,000 14 Units in beginning inventory 15 Units produced during the year 16 Units sold during the year 5,000 4,500 18 Use the data to answer the following. 19 20 1. Assume the company uses variable costing 22 Compute the unit product cost for one fireplace

Explanation / Answer

Req 1. Unit cost underr Variable costing: Direct Material 135 Direct labor 43 Variable Manufacturing OH 37 Unit product cost 215 Contribution Margin Income Statement: Sales (4500 units @420) 1890000 Variable expense variable cost of goods sold 967500 variable selling expense 202500 Contribution Margin    720000 Fixed expense: Fixed Manufacturing OH 210000 Fixed selling expense 190000 400000 Net income 320000 Break-even units: Total fixed cost 400000 Divide: Contribution margin per unit 160 (720000/4500 units) Number of break even units 2500 Req 2. Unit product cost under Absorption costing: Direct Material 135 Direct labor 43 Variable Manufacturing OH 37 Fixed Manufacturing OH 42 (210000 /5000 units Unit Product cost     257 Income Statement: Sales revenue 1890000 Less: Cost of goods sold 1156500 (4500 units @257) Gross margin 733500 Selling expenses 392500 (4500 *45+ 190000) Net Income 341000

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