Question

Lilac, LLC had the following amounts:

Direct materials $12 per unit

Direct Labor $14 per unit

Variable overhead $3 per unit

Fixed overhead $67,500 Variable selling expenses $4 per unit

Fixed selling and administrative expenses $112,000

67,500 units produced

59,500 units sold

Sales price per unit is $44 each

Calculate the Absorption product cost per unit and prepare a Multi-Step Income Statement under Absorption Costing in order to fill in the rest of the information.

Absorption product cost per unit

$ Total Sales in dollars

$ Gross Profit

$ Net Income $

Answer 1

Fixed overhead per unit = Fixed overhead / Units produced
Fixed overhead per unit = $67,500 / 67,500
Fixed overhead per unit = $1

Product cost per unit = Direct materials + Direct labor + Variable overhead + Fixed overhead
Product cost per unit = $12 + $14 + $3 + $1
Product cost per unit = $30

Sales = Selling price per unit * Units sold
Sales = $44 * 59,500
Sales = $2,618,000

Cost of goods sold = Product cost per unit * Units sold
Cost of goods sold = $30 * 59,500
Cost of goods sold = $1,785,000

Selling and administrative expenses = Variable selling expenses per unit * Units sold + Fixed selling and administrative expenses
Selling and administrative expenses = $4 * 59,500 + $112,000
Selling and administrative expenses = $350,000