Question

In: Accounting

Variable Costing

Using Variable Costing to prepare an Income Statement and using the same method to calculate the Unit Production Cost.

Solutions

Expert Solution

The Income Statement is prepared only for the number of units sold.
 
Sales Revenue = No of Cases Sold x Sale Price per Case = 12000 x $29 = $348,000
 
Variable Manufacturing Cost = No of Cases Sold x Variable Manufacturing Cost per case = 12000x $9 = $108,000
 
Variable Selling Cost = No of Cases Sold x Variable Selling Cost per Case = 12,000 x $3 = $36,000
 
In Variable Costing, the Product Cost is made up of only the Variable Expenses incurred. The Fixed Expenses are only expenses in the Income Statement.
Product Cost (Unit)
Variable Manufacturing Cost
$9
Variable Selling Expense
$3
Unit Product Cost
$12
Sales Revenue=No of Cases Sold x Sale Price per Crate=12,000×$29=$348,000
Cost of Ending Inventory = (Produced Units - Sold Units) x Unit Product Cost = (13000-12000) x $12 = $12,000
ReVitalAde
Income Statement (Variable Costing)
Month ended April 30
Sales Revenue
 
$348,000
Less: Variable Expenses
 
 
Variable Manufacturing Expenses
$108,000
 
Variable Selling Expenses
$36,000
$144,000
Contribution
 
$204,000
Less: Fixed Expenses
 
 
Fixed Manufacturing Expenses
$91,000
 
Fixed Selling Expenses
$9,000
$100,000
Operating Income
 
$104,000

 

The cost per unit is $10 and the total cost of the 1,000 cases in Finished Goods Inventory as of April 30 is $12,000.
Variable Manufacturing Cost=No of Cases Sold x V
Variable Selling Cost=No of Cases Sold x Variable Selling Cost per case=12,000×$3=$3

The Net Operating Income is $104,000.

The Cost per Unit comes to $10 and the cost of the Ending Inventory is $12,000.

Soumik Mallick Choudhury answered 2 years ago
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