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Activity 05: 202180927 - VISTA, MARK LESTER A. Ol33E21 - Bs Accountancy Olcae09 - Financial Accounting and Reporting

The document contains practice problems and solutions for calculating unit product costs under both variable and absorption costing methods. Several manufacturing companies that produce single products provide data on units produced and sold, variable costs per unit, and total fixed costs. The problems require calculating unit product costs based on this data under the different costing methods.

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374 views6 pages

Activity 05: 202180927 - VISTA, MARK LESTER A. Ol33E21 - Bs Accountancy Olcae09 - Financial Accounting and Reporting

The document contains practice problems and solutions for calculating unit product costs under both variable and absorption costing methods. Several manufacturing companies that produce single products provide data on units produced and sold, variable costs per unit, and total fixed costs. The problems require calculating unit product costs based on this data under the different costing methods.

Uploaded by

Vexana Necromancer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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202180927 – VISTA, MARK LESTER A.

OL33E21 – BS ACCOUNTANCY

OLCAE09 – FINANCIAL ACCOUNTING AND REPORTING

ACTIVITY 05

Fleet Corporation produces a single product. The company manufactured 700 units last year. The
ending inventory consisted of 100 units. There was no beginning inventory. Variable
manufacturing costs were $6.00 per unit and fixed manufacturing costs were $2.00 per unit.
What would be the change in the dollar amount of ending inventory if variable costing was used
instead of absorption costing?

Answer: B $200 decrease

= Change in Inventory x Fixed Manufacturing Cost per unit


= 100 X 2 = 200 decrease

Shun Corporation manufactures and sells a hand held calculator. The following information
relates to Shun's operations for last year:

Unit product cost under variable costing $5.20 per unit


Fixed manufacturing overhead cost for the year $260,000
Fixed selling and administrative cost for the year $180,000
Units (calculators) produced and sold 400,000

What is Shun's unit product cost under absorption costing for last year?

Answer: C $5.85

= $260,000 ÷ 400,000 units = $0.65 per unit


Unit product cost = $5.20 + $0.65 = $5.85

A manufacturing company that produces a single product has provided the following data
concerning its most recent month of operations:
Units in beginning inventory 0
Units produced 7,100
Units sold 7,000
Units in ending inventory 100

Variable costs per unit:


Direct materials $33
Direct labor $53
Variable manufacturing overhead $1
Variable selling and administrative $7

Fixed costs:
Fixed manufacturing overhead $170,400
Fixed selling and administrative $7,000

What is the unit product cost for the month under variable costing?

Answer: D $87

Unit product cost = Direct material + Direct Labor + Variable manufacturing overhead
= $33 + $53 + $1= $87

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

Units in beginning inventory 0

Units produced 1,900


Units sold 1,700
Units in ending inventory 200

Variable costs per unit:


Direct materials $33
Direct labor $32
Variable manufacturing overhead $2
Variable selling and administrative $6

Fixed costs:
Fixed manufacturing overhead $72,200
Fixed selling and administrative $6,800
What is the unit product cost for the month under absorption costing?

Answer: B $105

Unit fixed manufacturing overhead = $72,000 ÷ 1,900 = $38


Unit product cost = Direct Materials + Direct Labor + VMO + FMO
= 33 + 32 + 2 + 38 = $105

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

Selling price $79

Units in beginning inventory 0


Units produced 6,600
Units sold 6,300
Units in ending inventory 300

Variable costs per unit:


Direct materials $14
Direct labor $30
Variable manufacturing overhead $4
Variable selling and administrative $8

Fixed costs:
Fixed manufacturing overhead $46,200
Fixed selling and administrative $88,200

What is the total period cost for the month under the variable costing approach?

Answer: $184,800

Total Variable selling and administrative cost = $8 X 6,300 = $50,400

Period cost = total variable selling and administrative cost + FMO + Fixed selling and
administrative cost
= 50,400 + 46,200 + 88,200 = $184,800
A manufacturing company that produces a single product has provided the following data
concerning its most recent month of operations:

Selling price $97


Units in beginning inventory 0
Units produced 2,200
Units sold 2,100
Units in ending inventory 100

Variable costs per unit:


Direct materials $32
Direct labor $25
Variable manufacturing overhead $2
Variable selling and administrative $9

Fixed costs:
Fixed manufacturing overhead $8,800
Fixed selling and administrative $37,800

What is the total period cost for the month under the absorption costing approach?

Answer: $56,700

Total Variable selling and administrative cost = $9 X 2,100 = $18,900

Period cost = Variable selling and administrative cost + Fixed selling and administrative cost

= 18,900 + 37,800 = $56,700

Mullee Corporation produces a single product and has the following cost structure:
Number of units produced each year 7,000

Variable costs per unit:


Direct materials $51
Direct labor $12
Variable manufacturing overhead $2
Variable selling and administrative expense $5

Fixed costs per year:


Fixed manufacturing overhead $441,000
Fixed selling and administrative expense $112,000

The unit product cost under absorption costing is:

Answer: D $128

Unit fixed manufacturing overhead = 441,000 ÷ 7,000 = $63


Unit product cost = 63 + 51 + 12 + 2 = $128

Stoneberger Corporation produces a single product and has the following cost structure:

Number of units produced each year 4,000 Variable costs per unit:
Direct materials $50
Direct labor $72
Variable manufacturing overhead $6
Variable selling and administrative expense $3

Fixed costs per year:


Fixed manufacturing overhead $296,000
Fixed selling and administrative expense $76,000

The unit product cost under variable costing is:

Answer: A $128

Unit product cost = 50 + 72 + 6 = $128

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

Number of units produced 8,000


Variable costs per unit:
Direct materials $37
Direct labor $56
Variable manufacturing overhead $4
Variable selling and administrative expense $2

Fixed costs:
Fixed manufacturing overhead $312,000
Fixed selling and administrative expense $448,000

There was no beginning or ending inventories. The unit product cost under absorption costing
was:

Answer: C $136

Unit fixed manufacturing overhead = $312,000 ÷ 8,000 = $39


Unit product cost = 37 +56 + 4 +39 = $136
Kray Inc., which produces a single product, has provided the following data for its most recent
month of operations:

Number of units produced 3,000

Variable costs per unit:


Direct materials $91
Direct labor $13
Variable manufacturing overhead $7
Variable selling and administrative expense $6

Fixed costs:
Fixed manufacturing overhead $237,000
Fixed selling and administrative expense $165,000

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

Answer: A $111

Unit product cost = Direct materials + Direct labor + Variable manufacturing overhead
= $91 + $13 + $7 = $111

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