Question

dex company manufactures a single product assume the following data for 2016:

Fixed costs in total:

Selling and administrative 54,000

Production 72,000

Variable costs per unit:

Selling and administrative 3

Production 9

there were no units in inventory on january 1. during the year, 18,000 units were produced and 15,000 were sold. the selling price of dex company is 25 per unit. how much company’s net income for 2016 under the direct coating method?

Answer 1

Costing as per Direct Method

A	Fixed Manufacturing Cost	$           72,000.00
B	Units produced	18,000
C = A/B	Fixed manufacturing cost per unit	$                     4.00
D	Variable manufacturing cost per unit	$                     9.00
E = C +D	Total manufacturing cost per unit	$                   13.00

--Answer

A = 15000 units sold x $ 25	Sales	$        375,000.00
B = 15000 units sold x $ 13	Cost of Goods Sold	$        195,000.00
C = A - B	Gross Profit	$        180,000.00
	Operating Expenses:
D = 15000 units sold x $ 3	Variable Selling & Administrative	$           45,000.00
E	Fixed Selling & Administrative	$           54,000.00
F = D+E	Total expenses	$           99,000.00
G = C -F	Net Income for 2016	$           81,000.00