Question

Vinson Co. manufactures and sells one product. Assume the selling price for each item is $225/per unit. The following information pertains to the company’s first two years of operation:

Variable Costs Per Unit:

Manufacturing:

Direct Materials $34/unit

Direct Labor $23/unit

Variable Selling and Administrative $4/unit

Variable Manufacturing Overhead $6/unit

Fixed Costs:

Fixed Manufacturing Overhead $720,000

Fixed Selling and Administrative $120,000

Additionally, Vinson Company provides you with the following inventory flow information in terms of units for YEAR 1 & YEAR 2:

YEAR 1:

Beginning Inventory (units): 0

Units Produced: 120,000

Units Sold: 90,000

Ending Inventory (units): 30,000

YEAR 2:

Beginning Inventory (units): 30,000

Units Produced: 100,000

Units Sold: 115,000

Ending Inventory (units): 15,000

FOR YEAR 2 PLEASE ANSWER THE FOLLOWING QUESTIONS:

A. Calculate Vinson’s Unit Product Cost/Unit using the Variable Cost Method and Absorption Cost Method:

B. Using the Variable Cost Method----Compute Cost Goods Sold:

C. Using the Absorption Cost Method----Compute Cost Goods Sold:

D. Prepare the Company’s YEAR 2 Contribution Margin Income Statement---properly label and show all amounts:

Answer 1