Munn Bicycle Company manufactures bicycles specifically for college campuses. The bicycles sell for $100 and are very sturdy, with built-in saddlebags on the rear designed to carry backpacks. Selected data for last year's operations are as follows: Units in beginning inventory 0 Units produced 20,000 Units sold 18,000 Units in ending inventory 2,000 Variable costs per unit: Direct materials $40 Direct labor 20 Variable manufacturing overhead 5 Variable selling and administrative 2 Fixed costs: Fixed manufacturing overhead $250,000 Fixed S&A $100,000 Required: Round your answers to the nearest cent, if necessary. A) What is the product cost per bicycle if the company uses absorption costing? B) What is the product cost per bicycle if the company uses variable costing?
Munn Bicycle Company manufactures bicycles specifically for college campuses. The bicycles sell for $100 and are very sturdy, with built-in saddlebags on the rear designed to carry backpacks. Selected data for last year's operations are as follows: Units in beginning inventory 0 Units produced 20,000 Units sold 18,000 Units in ending inventory 2,000 Variable costs per unit: Direct materials $40 Direct labor 20 Variable manufacturing overhead 5 Variable selling and administrative 2 Fixed costs: Fixed manufacturing overhead $250,000 Fixed S&A $100,000 Required: Round your answers to the nearest cent, if necessary. A) What is the product cost per bicycle if the company uses absorption costing? B) What is the product cost per bicycle if the company uses variable costing?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Munn Bicycle Company manufactures bicycles specifically for college campuses. The bicycles sell for $100 and are very sturdy, with built-in saddlebags on the rear designed to carry backpacks. Selected data for last year's operations are as follows:
- Units in beginning inventory 0
- Units produced 20,000
- Units sold 18,000
- Units in ending inventory 2,000
Variable costs per unit:
- Direct materials $40
- Direct labor 20
- Variable manufacturing
overhead 5 - Variable selling and administrative 2
Fixed costs:
- Fixed manufacturing overhead $250,000
- Fixed S&A $100,000
Required: Round your answers to the nearest cent, if necessary.
A) What is the product cost per bicycle if the company uses absorption costing?
B) What is the product cost per bicycle if the company uses variable costing?
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