Beginning inventory - units
Unit produced 50,000 units
less: Unit sold 47,300 units
Ending inventory 2,700 units
Unit cost under variable Costing
Direct materials $ 123,000.00 $ 50,000.00 $ 2.46
Direct labor $ 93,000.00 $ 50,000.00 $ 1.86
Variable overhead $ 65,000.00 $ 50,000.00 $ 1.30
Unit cost $ 51,000.00 $ 5.62
Ending inventory in units 2,700
Cost of ending inventory under variable costing $ 15,174.00
EXERCISE 8-27: Chacon Inc.
Beginning inventory 5,000
Unit produced 20,000
less: Unit sold 23,700
Ending inventory in units 1,300
Costs incurred Cost Unit
Direct materials $ 160,000.00 20,000
Direct labor $ 80,000.00 20,000
Variable overhead $ 30,000.00 20,000
Fixed overhead $ 83,000.00 20,000
Variable selling expenses $ 71,100.00 23,700
Fixed selling and administrative expenses $ 24,300.00
1. Unit Cost and Cost of Ending Inventory under Absorption Costing
Unit cost under absorption costing
Direct materials $ 8.00
Direct labor $ 4.00
Variable overhead $ 1.50
Fixed overhead $ 4.15
Unit cost $ 17.65
Ending inventory in units 1,300
Cost of ending inventory under absorption costing $ 22,945.00
2. Unit Cost and Cost of Ending Inventory under Variable Costing
Unit cost under variable costing
Direct materials $ 8.00
Direct labor $ 4.00
Variable overhead $ 1.50
Unit cost $ 13.50
Ending inventory in units 1,300
Cost of ending inventory under variable costing $ 17,550.00
3. Contribution margin per unit
Selling price $ 27.00
Less:
Variable cost of goods sold $ 13.50
Commission $ 3.00
Contribution margin per unit $ 10.50
4. Zeitgeist Company
Absorption Costing Income Statement
Sales ($27.00 x 23,700 unit) $ 639,900.00
Less: Cost of goods sold ($17.65 x 23,700 units) $ 418,305.00
Gross margin $ 221,595.00
Less: Selling and administrative expenses
variable selling expenses $ 71,100.00
Fixed selling and administrative expenses $ 24,300.00 $ 95,400.00
Operating income $ 126,195.00
Zeitgeist Company
Variable Costing Income Statement
for The Month Ended 31 August 2014
Sales ($27.00 x 23,700 unit) $ 639,900.00
Less: Variable expenses
Variable Cost of goods sold ($13,50 x 23.700 units) $ 319,950.00
Variable selling expenses $ 71,100.00 $ 391,050.00
Contribution margin $ 248,850.00
Less: Fixed expenses
Fixed Overhead $ 83,000.00
Fixed selling and administrative expenses $ 24,300.00 $ 107,300.00
Operating income $ 141,550.00
Cost per unit
$ 8.00
$ 4.00
$ 1.50
$ 4.15
$ 3.00
EXERCISE 8-26: Zeitgeist Company
Beginning inventory 8,200
Unit produced 200,000
less: Unit sold 204,300
Ending inventory in units 3,900
Costs incurred Cost
Direct materials $ 570,000.00
Direct labor $ 384,000.00
Variable overhead $ 320,000.00
Fixed overhead $ 180,000.00
Variable selling expenses $ 183,870.00
Fixed selling and administrative expenses $ 96,000.00
1. Unit Cost and Cost of Ending Inventory under Absorption Costing
Unit cost under absorption costing
Direct materials $ 2.85
Direct labor $ 1.92
Variable overhead $ 1.60
Fixed overhead $ 0.90
Unit cost $ 7.27
Ending inventory in units 3,900
Cost of ending inventory under absorption costing $ 28,353.00
2. Unit Cost and Cost of Ending Inventory under Variable Costing
Unit cost under variable costing
Direct materials $ 2.85
Direct labor $ 1.92
Variable overhead $ 1.60
Unit cost $ 6.37
Ending inventory in units 3,900
Cost of ending inventory under variable costing $ 24,843.00
3. Contribution margin per unit
Selling price $ 9.00
Less:
Variable cost of goods sold $ 6.37
Commission $ 0.90
Contribution margin per unit $ 1.73
4. Zeitgeist Company
Absorption Costing Income Statement
for The Month Ended 31 August 2014
Sales ($27.00 x 23,700 unit)
Less: Cost of goods sold ($17.65 x 23,700 units)
Gross margin
Less: Selling and administrative expenses
variable selling expenses $ 183,870.00
Fixed selling and administrative expenses $ 96,000.00
Operating income
Zeitgeist Company
Variable Costing Income Statement
for The Month Ended 31 August 2014
Sales ($27.00 x 23,700 unit)
Less: Variable expenses
Variable Cost of goods sold ($13,50 x 23.700 units) $ 1,301,391.00
Variable selling expenses $ 183,870.00
Contribution margin
Less: Fixed expenses
Fixed Overhead $ 180,000.00
Fixed selling and administrative expenses $ 96,000.00
Operating income
Unit Cost per unit
200,000 $ 2.85
200,000 $ 1.92
200,000 $ 1.60
200,000 $ 0.90
204,300 $ 0.90
ent
014
$ 1,838,700.00
$ 1,485,261.00
$ 353,439.00
$ 279,870.00
$ 73,569.00
nt
014
$ 1,838,700.00
$ 1,485,261.00
$ 353,439.00
$ 276,000.00
$ 77,439.00
EXERCISE 8-26: Zeitgeist Company
Beginning inventory 8,200
Unit produced 200,000
less: Unit sold 196,700
Ending inventory in units 11,500
Costs incurred Cost Unit
Direct materials $ 570,000.00 200,000
Direct labor $ 384,000.00 200,000
Variable overhead $ 320,000.00 200,000
Fixed overhead $ 180,000.00 200,000
Variable selling expenses $ 177,030.00 196,700
Fixed selling and administrative expenses $ 96,000.00
1. Unit Cost and Cost of Ending Inventory under Absorption Costing
Unit cost under absorption costing
Direct materials $ 2.85
Direct labor $ 1.92
Variable overhead $ 1.60
Fixed overhead $ 0.90
Unit cost $ 7.27
Ending inventory in units 11,500
Cost of ending inventory under absorption costing $ 83,605.00
2. Unit Cost and Cost of Ending Inventory under Variable Costing
Unit cost under variable costing
Direct materials $ 2.85
Direct labor $ 1.92
Variable overhead $ 1.60
Unit cost $ 6.37
Ending inventory in units 11,500
Cost of ending inventory under variable costing $ 73,255.00
3. Contribution margin per unit
Selling price $ 27.00
Less:
Variable cost of goods sold $ 6.37
Commission $ 0.90
Contribution margin per unit $ 19.73
4. Zeitgeist Company
Absorption Costing Income Statement
for The Month Ended 31 August 2014
Sales ($27.00 x 23,700 unit) $ 5,310,900.00
Less: Cost of goods sold ($17.65 x 23,700 units) $ 1,430,009.00
Gross margin $ 3,880,891.00
Less: Selling and administrative expenses
variable selling expenses $ 177,030.00
Fixed selling and administrative expenses $ 24,300.00 $ 201,330.00
Operating income $ 3,679,561.00
Zeitgeist Company
Variable Costing Income Statement
for The Month Ended 31 August 2014
Sales ($27.00 x 23,700 unit) $ 5,310,900.00
Less: Variable expenses
Variable Cost of goods sold ($13,50 x 23.700 units) $ 1,252,979.00
Variable selling expenses $ 177,030.00 $ 1,430,009.00
Contribution margin $ 3,880,891.00
Less: Fixed expenses
Fixed Overhead $ 180,000.00
Fixed selling and administrative expenses $ 96,000.00 $ 276,000.00
Operating income $ 3,604,891.00
Cost per unit
$ 2.85
$ 1.92
$ 1.60
$ 0.90
$ 0.90
