Question

Lenart Corporation has provided the following data for its two most recent years of operation: Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials $ 13 Direct labor $ 5 Variable manufacturing overhead $ 5 Fixed manufacturing overhead per year $ 90,000 Selling and administrative expenses: Variable selling and administrative expense per unit sold $ 6 Fixed selling and administrative expense per year $ 61,000 Year 1 Year 2 Units in beginning inventory 0 1,000 Units produced during the year 10,000 9,000 Units sold during the year 9,000 8,000 Units in ending inventory 1,000 2,000

Answer 1

Answer: To calculate the total cost of the units in beginning inventory for each year, we need to multiply the number of units by the per-unit cost:

Year 1: Cost of units in beginning inventory = 0 units * $13 + $5 + $5 = $0

Year 2: Cost of units in beginning inventory = 1,000 units * ($13 + $5 + $5) = 1,000 * $23 = $23,000

To calculate the total cost of the units produced during each year, we need to multiply the number of units by the per-unit cost:

Year 1: Cost of units produced = 10,000 units * ($13 + $5 + $5) = 10,000 * $23 = $230,000

Year 2: Cost of units produced = 9,000 units * ($13 + $5 + $5) = 9,000 * $23 = $207,000

To calculate the total cost of the units sold during each year, we need to multiply the number of units sold by the per-unit cost:

Year 1: Cost of units sold = 9,000 units * ($13 + $5 + $5 + $6) = 9,000 * $29 = $261,000

Year 2: Cost of units sold = 8,000 units * ($13 + $5 + $5 + $6) = 8,000 * $29 = $232,000

To calculate the total variable manufacturing costs for each year, we need to sum the costs of the units in beginning inventory, units produced, and units sold:

Year 1: Total variable manufacturing costs = $0 + $230,000 + $261,000 = $491,000

Year 2: Total variable manufacturing costs = $23,000 + $207,000 + $232,000 = $462,000

To calculate the total fixed manufacturing overhead costs for each year, we need to add the fixed manufacturing overhead per year to the total variable manufacturing costs:

Year 1: Total manufacturing costs = $491,000 + $90,000 = $581,000

Year 2: Total manufacturing costs = $462,000 + $90,000 = $552,000

To calculate the total variable selling and administrative expenses for each year, we need to multiply the number of units sold by the variable selling and administrative expense per unit:

Year 1: Total variable selling and administrative expenses = 9,000 units * $6 = $54,000

Year 2: Total variable selling and administrative expenses = 8,000 units * $6 = $48,000

To calculate the total selling and administrative expenses for each year, we need to add the fixed selling and administrative expenses per year to the total variable selling and administrative expenses:

Year 1: Total selling and administrative expenses = $54,000 + $61,000 = $115,000

Year 2: Total selling and administrative expenses = $48,000 + $61,000 = $109,000

Explanation: