Polk Company builds custom fishing lures for sporting goods stores. In its first
ID: 2456297 • 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.
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.
Prepare a variable costing income statement for 2012.
$16.65
Explanation / Answer
Variable Cost per Unit
Direct materials $7.95
Direct labor $2.60
Variable manufacturing overhead $6.10
Manufacturing cost per unit $16.65
Variable selling and administrative expenses $4.13
variable costing income statement for 2012.
Particulars Amount variable mfg cost of qty produced 1573425 (94500*16.65) Add: opening stock of finished goods nil Less:Closing stock of finished goods 239760 (1573425/94500 * 14400) Variable manufacturing cost of qty sold 1333665 (1573425-239760) + variable selling cost of qty sold 330813 (80100 * 4.13) Total variable cost of qty sold 1664478 Sale value of qty sold 2122650 (80100 * 26.5) Contribution of qty sold 458172 Less - fixed cost 502096 Profit/(loss) (43924)