Please answer a thru g and show work 248 Components of Full

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

Answer: Gross margin income statement Sales revnue (30,000 units*$79) $           2,370,000.00 Less: Cost of goods sold Direct material $                     630,000.00 (21*30,000) Direct Labour $                     720,000.00 (21*30,000) Variable manufacturing overhead cost $                     360,000.00 (24*30,000) Fixed manufacturing overhead cost $                     135,000.00 $           1,845,000.00 (12*30,000) Gross margin $               525,000.00 Less: Marketing and administrative cost Variable marketing and administrative cost $                     150,000.00 (5*30,000) Fixed marketing and administrative cost $                     117,000.00 $               267,000.00 Operating Profit $               258,000.00 a Variable cost Direct material $                     630,000.00 (21*30,000) Direct Labour $                     720,000.00 (24*30,000) Variable manufacturing overhead cost $                     360,000.00 (12*30,000) Variable marketing and administrative cost $                     150,000.00 Total variable cost $                 1,860,000.00 b Variable manufacturing cost Direct material $                     630,000.00 (21*30,000) Direct Labour $                     720,000.00 (24*30,000) Variable manufacturing overhead cost $                     360,000.00 (12*30,000) Total Variable manufacturing cost $                 1,710,000.00 c Full absorption cost Direct material $                     630,000.00 Direct Labour $                     720,000.00 Variable manufacturing overhead cost $                     360,000.00 Fixed manufacturing overhead cost $                     135,000.00 $                 1,845,000.00 d Full Cost Direct material $                     630,000.00 Direct Labour $                     720,000.00 Variable manufacturing overhead cost $                     360,000.00 Fixed manufacturing overhead cost $                     135,000.00 Variable marketing and administrative cost $                     150,000.00 Fixed marketing and administrative cost $                     117,000.00 Total full cost $                 2,112,000.00 e Profit margin 10.89% (Operating Profit/Sales*100) (258,000/2370,000*100) f Gross margin 22.15% (Gross profit/Sales*100) (258,000/2370,000*100) g Contribution margin 21.52% (Sales-Variable cost)/Sales*100 ((2370,000-1860,000)/2370,000*100)