Question

On March 31, the end of the first month of operations, Barnard Inc. manufactured 15,000 units and sold 12,000 units. The following income statement was prepared, based on the variable costing concept: Barnard Inc. Variable Costing Income Statement For the Year Ended March 31, 20Y1 Sales $2,160,000 Variable cost of goods sold: Variable cost of goods manufactured $1,620,000 Inventory, March 31 (324,000) Total variable cost of goods sold (1,296,000) Manufacturing margin $864,000 Total variable selling and administrative expenses (96,000) Contribution margin $768,000 Fixed costs: Fixed manufacturing costs $210,000 Fixed selling and administrative expenses 45,000 Total fixed costs (255,000) Operating income $513,000 Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.

Answer 1

Answer and Explanation:

The computation of the unit cost of goods manufactured is shown below:

Particulars variable costing absorption costing

variable cost of $108 $108

goods manufactured ($1,620,000 ÷ 15,000)

Fixed manufacturing

cost $14

($210,000 ÷ 15,000)

unit cost of goods

manufactured $108 $122