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Cost of Goods Manufactured, using Variable Costing and Absorption Costing On March 31, the end of...

Cost of Goods Manufactured, using Variable Costing and Absorption Costing

On March 31, the end of the first year of operations, Barnard Inc., manufactured 3,700 units and sold 3,200 units. The following income statement was prepared, based on the variable costing concept:

Barnard Inc. Variable Costing Income Statement For the Year Ended March 31, 20Y1
Sales		$1,024,000
Variable cost of goods sold:
Variable cost of goods manufactured	$569,800
Inventory, March 31	(77,000)
Total variable cost of goods sold		(492,800)
Manufacturing margin		$531,200
Total variable selling and administrative expenses		(121,600)
Contribution margin		$409,600
Fixed costs:
Fixed manufacturing costs	$259,000
Fixed selling and administrative expenses	83,200
Total fixed costs		(342,200)
Operating income		$67,400

Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.

Variable costing	$
Absorption costing	$

Expert Solution

Variable cost of goods manufactured = $569,800

Number of units produced = 3,700

Fixed manufacturing cost = $259,000

(a)

Unit cost of goods manufactured variable costing = Variable cost of goods manufactured / Number of units produced

= 569,800/3,700

= $154

(b)

Unit cost of goods manufactured absorption costing = (Variable cost of goods manufactured + Fixed manufacturing cost )/ Number of units produced

= (569,800+259,000)/3,700

= $224

Variable costing	$154
Absorption costing	$224

ekkarill92 answered 2 years ago

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