3-3, 8-4, 8-6)Great Outdoze Company manufactures sleeping bags, which sell for $66.10 each. The variable costs of production are as follows:Direct materialDirect laborVariable manufacturing overhead$19.1010.307.40Budgeted fixed overhead in 20x1 was $157,500 and budgeted production was 25,000 sleeping bags. The year's actual productionwas 25,000 units, of which 21,300 were sold. Variable selling and administrative costs were $1.30 per unit sold; fixed selling andadministrative costs were $22,000.Required:1. Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing.2-a. Prepare an operating income statement for the year using absorption costing.2-b. Prepare an operating income statement for the year using variable costing.3. Reconcile reported operating income under the two methods using the shortcut method.Complete this question by entering your answers in the tabs below.Req 1Req 2AReq 2BReg 3Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing. (Do not round intermediatecalculations. Round your final answers to 2 decimal places.)Product CostPer UnitAbsorption costingVariable costingReg 1Req :>< Prev3 of 3Next>Q Search or enter website name2:46.7UOPDGH.CIS'

Solution:- a)Calculation of unit product cost under absorption costing as follows:-

Answered: Great Outdoze Company manufactures…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Fremont Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $40 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 25% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows:Cost Driver Dollar Amount per UnitDirect materials $15Direct labor 20Factory overhead (25% of direct labor) 5Total cost per unit 40If Fremont Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 5% of the direct labor costs. a. Prepare a differential analysis dated September 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. b. Based on the data presented, would it be advisable to make the carrying cases or to continue buying them? Explain in your own words.
Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 5.50 Direct labor $ 3.00 Variable manufacturing overhead $ 1.50 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 2.50 Fixed administrative expense $ 2.00 Sales commissions $ 1.00 Variable administrative expense $ 0.50 5. If 8,000 units are produced and sold, what is the total amount of variable costs related to the units produced and sold? (Do not round intermediate calculations.)
Skolnick Corporation has provided the following information: Cost per Unit Direct materials $ 5.20 Direct labor $ 4.70 Variable manufacturing overhead $ 1.80 Cost per Period Fixed manufacturing overhead $ 126,000 Sales commissions $ 1.40 Variable administrative expense $ 0.60 Cost per Period Fixed selling and administrative expense $39,600 Selling price $20.6 per unit. The value of break-even point sales is:
Northern Sparks. sells sparkplug for $48 each. The direct materials cost per unit is $15 and the direct labor is 0.50 hours at a rate of $28 per hour. Fixed manufacturing overhead is budgeted at $72,500 per period. Calculate the break even point in units. (Remember: You cannot sell partial units).
Bacolod Company, which manufactures and sells a single product for P15.00, is operating at full capacity of 20,000 units per month. The following unit costs relate to the manufacture of this product: Manufacturing: Direct materials Direct labor Variable overhead Fixed overhead P 2.00 4.00 1.00 1.80 Selling and administrative: Variable Fixed 3.00 1.20 The company has 1,000 units left over from last year's production which have small defects and which will have to be sold at a reduced price as part of a clearance sale provided that it will be refurbished at a cost of P1.50 per unit and there will be a need to purchase a special tool costing P 2,000 which will have no other use other than the refurbishing. Also, 50% of variable selling and administrative costs would have to be incurred to sell the defective units. The sale of the left over might affect the company's regular sale which may decrease by 500 units. Another option that Bacolod has is to simply sell the 1,000 units at its scrap…
Make-or-Buy Decision Companion Technologies Company has been purchasing carrying cases for its portable tablets at a delivered cost of $57 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 42% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows: Direct materials Direct labor $24.00 21.00 Factory overhead (42% of direct labor). Total cost per unit 8.82 $53.82 < If Companion Technologies Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 12% of the direct labor costs. a. Prepare a differential analysis report for the make-or-buy decision. Enter your final answer as a positive amount if it represents a net cost savings; enter a negative amount if it represents an increase in cost. COMPANION TECHNOLOGIES COMPANY Manufacture Carrying…
Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.50 Direct labor $ 4.00 Variable manufacturing overhead $ 1.60 Fixed manufacturing overhead $ 4.00 Fixed selling expense $ 3.50 Fixed administrative expense $ 2.20 Sales commissions $ 1.20 Variable administrative expense $ 0.45 13. If the selling price is $22.50 per unit, what is the contribution margin per unit? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Kubin Company's relevant range of production is 15,000 to 19,000 units. When it produces and sells 17,000 units, its average costs per unit are as follows: Amount per Unit $ 7.60 $ 4.60 $ 2.10 $ 5.60 $ 4.10 $ 3.10 $ 1.60 $ 1.10 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Required: 1. If 15,000 units are produced and sold, what is the variable cost per unit produced and sold? 2. If 19,000 units are produced and sold, what is the variable cost per unit produced and sold? 3. If 15,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 4. If 19,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 5. If 15,000 units are produced, what is the average fixed manufacturing cost per unit produced? 6. If 19,000 units are produced,…
Variable and Absorption CostingChandler Company sells its product for $108 per unit. Variable manufacturing costs per unit are $49, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $17 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory for the year. During the year, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company be higher if calculated using variable costing or using absorption costing?Calculate reported income using each method.Do not use negative signs with any answers.
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 5 pounds at $8.00 per pound Direct labor: 2 hours at $14 per hour Variable overhead: 2 hours at $5 per hour Total standard variable cost per unit The company also established the following cost formulas for its selling expenses: Variable Cost per Unit Sold Advertising Sales salaries and commissions Shipping expenses $ 40.00 28.00 10.00 $78.00 Fixed Cost per Month $ 200,000 $ 100,000 $12.00 $ 3.00 The planning budget for March was based on producing and selling 25,000 units. However, during March the company actually produced and sold 30,000 units and incurred the following costs: a. Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. b. Direct-laborers worked 55,000 hours at a rate of $15.00 per hour. Materials quantity…
Kubin Company's relevant range of production is 11,000 to 14,000'units. When it produces and sells 12,500 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Average Cost per Unit $ 7.20 $ 4.20 $ 1.70 $ 5.20 $ 3.70 $ 2.70 $ 1.20 $ 0.70 Required: 1. What is the incremental manufacturing cost incurred if the company increases production from 12,500 to 12,501 units? 2. What is the incremental cost incurred if the company increases production and sales from 12,500 to 12,501 units? 3. Assume that Kubin Company produced 12,500 units and expects to sell 12,280 of them. If a new customer unexpectedly emerges and expresses interest in buying the 220 extra units that have been produced by the company and that would otherwise remain unsold, what is the incremental manufacturing cost per unit incurred to sell…

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