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In: Accounting

During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....

During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units. During 2022, XYZ Company produced 30,000 units and sold 32,000 units. The following information was taken from XYZ's accounting records for 2021 and 2022: 2021 2022 Direct materials cost per unit ............ $18 $17 Direct labor cost per unit ................ $16 $21 Variable overhead cost per unit ........... $7 $9 Variable selling & admin cost per unit .... $4 $6 Fixed overhead (total cost) ............... $105,000 $144,000 Fixed selling & admin (total cost) ........ $88,000 $96,000 Assume the selling price of XYZ Company's product was $64 per unit for both years. Calculate XYZ Company's 2022 cost of goods sold using variable costing. Assume XYZ Company employs a weighted average inventory cost flow assumption.

Solutions

Expert Solution

particular

2021

2022

units produced

25,000 units

30,000 units

direct material

          4,50,000

          5,10,000

direct labour

          4,00,000

          6,30,000

variable overhead

          1,75,000

          2,70,000

fixed overhead

          1,05,000

          1,44,000

cost of goods sold

       11,30,000

       15,54,000

cost of goods sold per unit

                45.20

                51.80

Weighted average price of 2022 = cost of opening stock + cost of units produced in 2022

                                                              Units in beginning of 2022 + units produced in 2022

                                                           = (6,000 x 45.20) + (30,000 x 51.80) / 6,000 + 30,000

                                                            = 271,200 + 15,54,000 / 36,000

          

                                                            = 50.7 per unit sold

Cost of goods sold of 2022 = units sold in 2022 x weighted average price

                                                 = 32,000 x 50.7

                                                 = 16,22,400

ekkarill92 answered 1 year ago
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