$11.80
Total variable manufacturing cost
($11.80 per unit × 6,000 units produced)
$70,800
Total fixed manufacturing overhead cost
($3.00 per unit × 6,000 units produced)
18,000
Total product (manufacturing) cost
$88,800
b.
Sales commissions
$1.50
Variable administrative expense
0.45
Variable selling and administrative expense per unit
$1.95
Total variable selling and administrative expense
($1.95 per unit × 6,000 units sold)
$11,700
Total fixed selling and administrative expense
($0.75 per unit × 6,000 units + $0.60 per unit × 6,000 units)
8,100
Total period (nonmanufacturing) cost
$19,800
c.
Selling price per unit
$20.20
Direct materials
$6.40
Direct labor
3.80
Variable manufacturing overhead
1.60
Sales commissions
1.50
Variable administrative expense
0.45
Variable cost per unit sold
13.75
Contribution margin per unit
$6.45
d.
Direct materials
$6.40
Direct labor
3.80
Direct manufacturing cost per unit (a)
$10.20
Number of units produced (b)
7,000
Total direct manufacturing cost (a) × (b)
$71,400
e.
Total variable manufacturing overhead cost
($1.60 per unit × 7,000 units)
$11,200
Total fixed manufacturing overhead cost
($3.00 per unit × 6,000 units*)
18,000
Total indirect manufacturing cost
$29,200
*The average fixed manufacturing overhead cost per unit was determined by dividing the total fixed manufacturing overhead cost by 6,000 units.
f.
Direct materials
$6.40
Direct labor
3.80
Variable manufacturing overhead
1.60
Incremental manufacturing cost
$11.80
Difficulty: 2 Medium
Topic: Cost Classifications for Assigning Costs to Cost Objects; Cost Classifications for Manufacturing Companies; Cost Classifications for Preparing Financial Statements; Cost Classifications for Predicting Cost Behavior; Cost Classifications for Decision Making; Using Different Cost Classifications for Different Purposes
Learning Objective: 01-01 Understand cost classifications used for assigning costs to cost objects: direct costs and indirect costs.; 01-02 Identify and give examples of each of the three basic manufacturing cost categories.; 01-03 Understand cost classifications used to prepare financial statements: product costs and period costs.; 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.; 01-05 Understand cost classifications used in making decisions: differential costs, sunk costs, and opportunity costs.; 01-06 Prepare income statements for a merchandising company using the traditional and contribution formats.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
277) Learned Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$5.20
Direct labor
$3.85
Variable manufacturing overhead
$1.35
Fixed manufacturing overhead
$27,000
Sales commissions
$0.50
Variable administrative expense
$0.40
Fixed selling and administrative expense
$9,000
Required:
a. For financial reporting purposes, what is the total amount of product costs incurred to make 6,000 units?
b. For financial reporting purposes, what is the total amount of period costs incurred to sell 6,000 units?
c. If the selling price is $22.40 per unit, what is the contribution margin per unit sold?