Polk Company builds custom fishing lures for sporting goods stores. In its first
ID: 2454560 • Letter: P
Question
Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs. Variable Cost per Unit Direct materials $7.95 Direct labor $2.60 Variable manufacturing overhead $6.10 Variable selling and administrative expenses $4.13 Fixed Costs per Year Fixed manufacturing overhead $247,590 Fixed selling and administrative expenses $254,506 Polk Company sells the fishing lures for $26.50. During 2012, the company sold 80,100 lures and produced 94,500 lures. Collapse question part (a) Correct answer. Your answer is correct. Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50.) Manufacturing cost per unit $Entry field with correct answer 16.65 SHOW SOLUTION SHOW ANSWER LINK TO TEXT By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Attempts: 1 of 3 used Collapse question part (b) Prepare a variable costing income statement for 2012. POLK COMPANY Income Statement For the Year Ended December 31, 2012 Variable Costing $ $ $
Explanation / Answer
Computation of manufacturing costs per unit Direct Materials 7.95 Direct labor 2.60 Manufacturing overhead 6.10 Total Manufacturing Cost 16.65 Income Statement Under Marginal Costing Particulars Units Rate Amount Sales 80100.00 26.50 2122650.00 Less: Variable Manufacturing Cost 80100.00 16.65 1333665.00 Less: Variable Selling Costs 80100.00 4.13 330813.00 Contribution 80100.00 5.72 458172.00 Less: Fixed Manufacturing cost 247590.00 Less: Fixed Selling cost 254506.00 Net Income (43,924.00)