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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
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?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education