Section B Albany Products produced and sold 900 units of the

Section B Albany Products produced and sold 900 units of the company product in January 2018. You have collected the following information from the accounting records: Sales price (per unit) Manufacturing costs: S 448 Fixed overhead (for the month) Direct labor (per unit) Direct materials (per unit). Variable overhead (per unit) 50,400 35 112 70 . Marketing and administrative costs: Fixed costs (for the month) Variable costs (per unit) 67,500 14 . Compute: 1. Variable manufacturing cost per unit. 2. Full cost per unit. 3. Variable cost per unit. 4. Full absorption cost per unit. 5. Prime cost per unit. 6. Conversion cost per unit. 7. Profit margin per unit, 8. Contribution margin per unit

Solution

1.Variable manufacturing cost per unit. $217

2.Full cost per unit. $362

3.Variable cost per unit. $231

4.Full absorption cost per unit. $273

5.Prime cost per unit. $147

6.Conversion cost per unit. $161

7.Profit margin per unit. $86

8.Contribution margin per unit. $217

9.Gross margin per unit. $175

Explanation:

1.Variable manufacturing cost = Manufacturing overhead + Direct labor + Direct materials

= $70 + $35 + $112= $217

2.Full unit cost = All unit fixed costs + All unit variable costsUnit fixed manufacturing

= ($50,400 ÷ 900 units) = $56

Unit fixed marketing and administrative cost = ($67,500 ÷ 900 units) = $75

= $56 + $75 + $35 + $112 + $70 + $14= $362

3. Variable cost = All variable unit costs= $14 + $70 + $35 + $112= $231

4.Full absorption cost = Fixed and variable manufacturing overhead + Direct labor + Direct materials

= $56 + $70 + $35 + $112= $273

5.Prime cost = Direct labor + Direct materials= $35 + $112= $147

6.Conversion cost = Direct labor + Manufacturing overhead= $35 + ($70 + $56)= $161

7.Profit margin = Sales price – Full cost= $448 – $362= $86

8.Contribution margin = Sales price – Variable costs= $448 – $231= $217

9.Gross margin = Sales price – Full absorption cost= $448 – $273= $175