Question

jean peck's furniture manufactures tables for hospitality sector. it takes only bulk orders and each table is sold for $300 after negotiations. in the month of january, it manufactures 3,200 tables and sells 2,400 tables. actual fixed costs are the same as the amount of fixed costs budgeted for the month. the following information is provided for the month of january: variable manufacturing costs $140 per unit fixed manufacturing costs $105,000 per month fixed administrative expenses $27,000 per month at the end of the month jean peck's furniture has an ending inventory of finished goods of 800 units. the company also incurs a sales commission of $14 per unit. what is the cost of goods sold per unit when using absorption costing?

Answer 1

The cost of goods sold per unit when using absorption costing is $105.73.

Step-by-step explanation:

First, let's calculate the total manufacturing cost per unit. The variable manufacturing cost is $140 per unit, and the fixed manufacturing costs are $105,000 per month. The total manufacturing cost per unit is the sum of the variable and fixed manufacturing costs, which is $140 + ($105,000/3,200) = $140 + $32.81 = $172.81 per unit.

Next, let's calculate the total cost per unit. The total cost per unit is the sum of the total manufacturing cost per unit and the fixed administrative expenses per unit. The fixed administrative expenses are $27,000 per month, so the total cost per unit is $172.81 + ($27,000/3,200) = $172.81 + $8.44 = $181.25 per unit.

Finally, let's calculate the cost of goods sold per unit using absorption costing. The cost of goods sold per unit is the total cost per unit minus the ending inventory per unit. The ending inventory of finished goods is 800 units. Therefore, the cost of goods sold per unit is $181.25 - ($181.25/2,400) = $181.25 - $75.52 = $105.73 per unit.

Answer 2

Under absorption costing, the COGS per unit for Jean Peck's Furniture is $183.75, calculated by allocating both variable and fixed manufacturing costs to the units sold.

Step-by-step explanation:

To calculate the cost of goods sold (COGS) per unit using absorption costing for Jean Peck's furniture that manufactures tables, we need to take into account both variable and fixed manufacturing costs allocated to the units sold. In January, Jean Peck's furniture made 3,200 tables but sold only 2,400 tables. The cost of goods manufactured is the sum of variable costs for the units sold ($140 × 2,400 = $336,000) plus the fixed manufacturing costs ($105,000), which gives us $441,000. This total cost is divided by the number of units sold to determine the COGS per unit; $441,000 ÷ 2,400 = $183.75. However, since we are utilizing absorption costing, it's important to add the per-unit allocation of fixed manufacturing costs for the ending inventory which will not be recognized as a cost of goods sold until those goods are actually sold.