Question

In: Accounting

Columbia Products produced and sold 1,400 units of the company’s only product in March. You have...

Columbia Products produced and sold 1,400 units of the company’s only product in March. You have collected the following information from the accounting records:
  

Sales price (per unit) $ 133
Manufacturing costs:
Fixed overhead (for the month) 16,800
Direct labor (per unit) 10
Direct materials (per unit) 33
Variable overhead (per unit) 24
Marketing and administrative costs:
Fixed costs (for the month) 21,000
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.

Solutions

Expert Solution

1. Variable Manufacturing cost per unit

Direct Labour 10

Direct Materials 33

Variable Overhead 24

Total Variable Manufacturing cost per unit = ( 10 +33 +24 ) 67

Note: Variable manufacturing overhead include Direct Labour, Direct Material and Variable Overhead

2. Full cost per unit

Full cost per unit will include Variable cost per unit as well as Fixed costs per unit

Manufacturing Costs

Fixed Overhead per unit 16800/1400 = 12

Dierct Labour 10

Direct Material 33

Variable Overhead 24

Marketing and Administrative cost

Fixed Costs 21000/1400 15

Variable cost 4

Full cost per unit   98

3. Variable Cost per unit

Direct Labour 10

Direct Material 33

Variable Manufacturing cost 24

Variable Marketing and Administrative cost 4

Total Variable cost 71

4. Full absorption cost per unit

All variable and fixed manufacturing cost per unit would be taken into account

Direct Labour 10

Direct Material 33

Manufacturing Variable Overhead 24

Manufacturing Fixed Overhead 16800/1400 12

Full absorption cost per unit   79


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