Cost of Goods Manufactured, using Variable Costing and Absorption Costing On Dec
ID: 2510800 • Letter: C
Question
Cost of Goods Manufactured, using Variable Costing and Absorption Costing
On December 31, the end of the first year of operations, Frankenreiter Inc., manufactured 6,400 units and sold 5,500 units. The following income statement was prepared, based on the variable costing concept:
Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.
Frankenreiter Inc.Variable Costing Income Statement
For the Year Ended December 31, 20Y1 Sales $2,530,000 Variable cost of goods sold: Variable cost of goods manufactured $1,414,400 EInventory, December 31 (198,900) Total variable cost of goods sold 1,215,500 Manufacturing margin $1,314,500 Total variable selling and administrative expenses 302,500 Contribution margin $1,012,000 Fixed costs: Fixed manufacturing costs $646,400 Fixed selling and administrative expenses 203,500 Total fixed costs 849,900 Income from operations $162,100
Explanation / Answer
Unit cost of goods manufactured: Variable costing 221 =1414400/6400 Absorption costing 322 =(1414400+646400)/6400