Cost of Goods Manufactured, using Variable and Absorption Costing On June 30, th
ID: 2755713 • Letter: C
Question
Cost of Goods Manufactured, using Variable and Absorption Costing
On June 30, the end of the first year of operations, Johnson Industries, Inc., manufactured 5,900 units and sold 5,100 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.
Johnson Industries, Inc.Variable Costing Income Statement
For the Year Ended June 30, 2015 Sales $1,071,000 Variable cost of goods sold: Variable cost of goods manufactured $595,900 Less inventory, June 30 80,800 Variable cost of goods sold 515,100 Manufacturing margin $555,900 Variable selling and administrative expenses 127,500 Contribution margin $428,400 Fixed costs: Fixed manufacturing costs $271,400 Fixed selling and administrative expenses 86,700 358,100 Income from operations $70,300
Explanation / Answer
Variable costing $ 101 Absorption costing $ 147 Calculation of Unit Cost of Goods Manufactured Absorbtion Costing Variable Costing Total - (a) Unit Cost - (a)/5900 Total - (a) Unit Cost - (a)/5900 Variable cost of Goods Manufactured 595900 101 595900 101 Fixed Manufacturing Cost 271400 46 Total 867300 147 595900 101 Note: Fixed Overhead cost has not been included while calculating cost of unit manufactured under variable costing Selling and administration expenses are not relevant for the computation of unit product cost