Question

In: Accounting

Kray Inc., which produces a single product, has provided the following data for its most recent...

Kray Inc., which produces a single product, has provided the following data for its most recent month of operations:

Number of units produced 5,800
Variable costs per unit:
Direct materials $ 34
Direct labor $ 20
Variable manufacturing overhead $ 9
Variable selling and administrative expense $ 4
Fixed costs:
Fixed manufacturing overhead $ 481,400
Fixed selling and administrative expense $ 464,000

There were no beginning or ending inventories. The variable costing unit product cost was:

Multiple Choice

$146 per unit

$63 per unit

$67 per unit

$58 per unit

.

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

Selling price $ 144
Units in beginning inventory 0
Units produced 3,020
Units sold 2,730
Units in ending inventory 290
Variable costs per unit:
Direct materials $ 47
Direct labor $ 21
Variable manufacturing overhead $ 16
Variable selling and administrative expense $ 9
Fixed costs:
Fixed manufacturing overhead $ 90,600
Fixed selling and administrative expense $ 35,490

The total gross margin for the month under absorption costing is:

Multiple Choice

$81,900

$21,840

$128,430

$139,230

Solutions

Expert Solution

Answer 1
The variable costing unit product cost
Per Unit
Direct materials $34.00
Direct Labour $20.00
Variable Manufacturing Overhead $9.00
Unit product cost $63.00
The answer is $63 per unit.
Answer 2
The absorption costing unit product cost
Per Unit
Direct materials $47.00
Direct Labour $21.00
Variable Manufacturing Overhead $16.00
Fixed Manufacturing overhead $30.00
Unit product cost $114.00
Fixed manufacturing overhead cost per unit = Total Fixed manufacturing overhead cost / Units produced = $90600 / 3020 units = $30 per unit
Calculation of the total gross margin for the month under absorption costing
Sales [2730 units * $144] $393,120.00
Less : Cost of goods sold [2730 units * $114] $311,220.00
Gross Margin for the month $81,900.00
The answer is $81,900

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