Polk Company builds custom fishing lures for sporting goods stores. In its first
ID: 2468771 • 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
$8.10
Direct labor
$2.65
Variable manufacturing overhead
$6.21
Variable selling and administrative expenses
$4.21
Fixed Costs per Year
Fixed manufacturing overhead
$253,650
Fixed selling and administrative expenses
$259,308
Polk Company sells the fishing lures for $27.00. During 2012, the company sold 80,800 lures and produced 95,000 lures.
(a)
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.)
Variable Cost per Unit
Direct materials
$8.10
Direct labor
$2.65
Variable manufacturing overhead
$6.21
Variable selling and administrative expenses
$4.21
Fixed Costs per Year
Fixed manufacturing overhead
$253,650
Fixed selling and administrative expenses
$259,308
Explanation / Answer
Calculation of Manufacturing Cost per unit under Variable Costing Direct Material 8.1 Direct Labour 2.65 Variable Manufacturing Overheads 6.21 Manufacturing Cost per unit 16.96