248 Components of Full Costs Larcker Manufacturings cost acc

2-48. Components of Full Costs Larcker Manufacturing\'s cost accountant has provided you with the following information for January operations: (LO 2-6) Direct Fixed manufacturing overhead costs $21 $135,000 . . . . $79 per unit Variable manufacturing overhead . . . . . .. . . . . . . . . .. $12 per unit Direct labor . . . . . . . . . . . . .. $24 per unit $117,000 30,000 $5 per unit Fixed marketing and administrative costs....... . . . .. Variable marketing and administrative costs..... Required Determine each of the following: a. Variable cost. b. Variable manufacturing cost. c Full absorption cost. d. Full cost. e Profit margin. f Gross margin. g Contribution margin

Solution

Product cost Direct material 21 Direct labor 24 Variable manufacturing overhead 12 Variable manufacturing cost 57 Units manufactured 30000 Units sold 30,000 Income statement Sales revenue 2370000 Less Variable expense Variable manufacturing cost 1710000 Variable marketing and admin expense 150000 Total variable expense 1860000 Contribution margin 510000 Less Fixed cost Fixed manufacturing expense 135000 Fixed Marketing and Admin expense 117000 Total fixed expenses 252000 Net operating income 258000 Product cost Direct material 21 Direct labor 24 Variable manufacturing overhead 12 Fixed manufacturing (135000/30000) 4.5 Total product cost 61.5 Units produced 30000 Units sold 30,000 Income statement Sales revenue 2370000 cost of goods sold Beginning inventory 0 cost of goods manufactured 1845000 Add Goods available for sale 1845000 Ending inventory 0 Less Cost of goods sold 1845000 Gross profit 525000 Selling and admin expenses Less Variable marketing and admin expense 150000 Fixed marketing and selling expense 117000 Total Selling and admin expenses 267000 Net operating income 258000