Question

olumbia Products produced and sold 1,300 units of the company’s only product in March. You have collected the following information from the accounting records:
  

Sales price (per unit)	$	127
Manufacturing costs:
Fixed overhead (for the month)		13,000
Direct labor (per unit)		6
Direct materials (per unit)		33
Variable overhead (per unit)		23
Marketing and administrative costs:
Fixed costs (for the month)		19,500
Variable costs (per unit)		4

Required:

a. Compute the following:

  

	1. Variable manufacturing cost per unit. 2. Full cost per unit. 3. Variable cost per unit. 4. Full absorption cost per unit. 5. Prime cost per unit. 6. Conversion cost per unit. 7. Profit margin per unit. 8. Contribution margin per unit. 9. Gross margin per unit.

Answer 1

Answer:1)- Variable manufacturing cost = Manufacturing overhead + Direct labor + Direct materials

= $23 + $6 + $33= $62 per unit

2)- Full unit cost = All unit fixed costs + All unit variable costs

Unit fixed manufacturing = ($13000/1300 units) = $10

Unit fixed marketing and administrative cost = ($19500 /1300 units) = $15

= $10 + $23+ $6 + $33 + $15 + $4= $91 per unit

3)- Variable cost = All variable unit costs

= $6+ $33 + $23 + $4= $66 per unit

4)- Full absorption cost = Fixed and variable manufacturing overhead + Direct labor + Direct materials= $10 + $23 + $6+ $33= $72 per unit

5)- Prime cost = Direct labor + Direct materials= $6 + $33= $39 per unit

6)- Conversion cost = Direct labor + Manufacturing overhead= $6 + ($23 + $10)= $39 per unit

7)- Profit margin = Sales price – Full cost= $127 – $91= $36 per unit

8)- Contribution margin = Sales price – Variable costs= $127 – $66= $61 per unit

9)- Gross margin = Sales price – Full absorption cost= $127 – $72= $55 per unit