During the first year of operations, 18,000 units were manufactured and 13,500 units were sold. On August 31, Olympic Inc. prepared the following income statement based on the variable costing concept:Olympic Inc.Variable Costing Income StatementFor Year Ended August 31, 20--Sales $297,000Variable cost of goods sold: Variable cost of goods manufactured $288,000 Less ending inventory 72,000 Variable cost of goods sold 216,000Manufacturing margin $81,000Variable selling and administrative expenses 40,500Contribution margin $40,500Fixed costs: Fixed manufacturing costs $12,000 Fixed selling and administrative expenses 10,800 22,800Income from operations $17,700 a. Determine the unit cost of goods manufactured based on the variable costing concept.$b. Determine the unit cost of goods manufactured based on the absorption costing concept. Round your answer to two decimal places.$

Variable Costing: Managers frequently use variable costing for internal purposes for taking decision…

Answered: During the first year of operations,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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During the first year of operations, 18,000 units were manufactured and 13,500 units were sold. On August 31, Olympic Inc. prepared the following income statement based on the variable costing concept:

Olympic Inc. Variable Costing Income Statement For Year Ended August 31, 20--
Sales		$297,000
Variable cost of goods sold:
Variable cost of goods manufactured	$288,000
Less ending inventory	72,000
Variable cost of goods sold		216,000
Manufacturing margin		$81,000
Variable selling and administrative expenses		40,500
Contribution margin		$40,500
Fixed costs:
Fixed manufacturing costs	$12,000
Fixed selling and administrative expenses	10,800	22,800
Income from operations		$17,700

a. Determine the unit cost of goods manufactured based on the variable costing concept.
$

b. Determine the unit cost of goods manufactured based on the absorption costing concept. Round your answer to two decimal places.
$

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