A manufacturing company, Exeter Corporation produces a single product with a selling price of $74 per unit, the following data regarding it’s operation in the current years is available : Units in Beginning Inventory in Year 1 0 units Units produced in Year 1 23,000 units Units sold in Year 1 19, 500 units Units produced in Year 2 20,000 units Units sold in Year 2 22,000 units Variable costs of the company during Year 1 operations : DM $33 DL $11 MOH $3.5 Selling & Admin $8.70 Fixed costs of the company during Year 1 operations : Selling & Admin expenses $85,000 Manufacturing Overheads $250,000 Variable costs of the company during Year 2 operations : DM $33.75 DL $12 MOH $3.5 Selling & Admin $9 Fixed costs of the company during Year 2 operations : Selling & Admin expenses $85,000 Manufacturing Overheads $250,000 Required: a. Calculate the product cost per unit for Year 1 and Year 2, under the Variable Costing System.
A manufacturing company, Exeter Corporation produces a single product with a selling price of
$74 per unit, the following data regarding it’s operation in the current years is available :
Units in Beginning Inventory in Year 1 0 units
Units produced in Year 1 23,000 units
Units sold in Year 1 19, 500 units
Units produced in Year 2 20,000 units
Units sold in Year 2 22,000 units
Variable costs of the company during Year 1 operations :
DM $33
DL $11
MOH $3.5
Selling & Admin $8.70
Fixed costs of the company during Year 1 operations :
Selling & Admin expenses $85,000
Manufacturing Overheads $250,000
Variable costs of the company during Year 2 operations :
DM $33.75
DL $12
MOH $3.5
Selling & Admin $9
Fixed costs of the company during Year 2 operations :
Selling & Admin expenses $85,000
Manufacturing Overheads $250,000
Required:
a. Calculate the product cost per unit for Year 1 and Year 2, under the Variable Costing System.
b. Calculate the product cost per unit for Year 1 and Year 2, under the Absorption Costing System.
c. Prepare the Income Statements for Year 1 and Year 2 , using the variable costing system.
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