Answer:
a. The unit cost of goods manufactured based on the variable costing concept.
=Total variable cost of goods manufactured / Total units Manufactured
= (288,000) /18,000= $ 16
b. The unit cost of goods manufactured based on the absorption costing concept.
=Variable cost of goods manufactured +Fixed manufacturing costs / Total units Manufactured=$288,000+ $12,000/18,000= $ 16.67
Explanation:
a. The unit cost of goods manufactured based on the variable costing concept.
=Total variable cost of goods manufactured / Total units Manufactured
= (288,000) /18,000= $ 16
b. The unit cost of goods manufactured based on the absorption costing concept.
=Variable cost of goods manufactured +Fixed manufacturing costs / Total units Manufactured=$288,000+ $12,000/18,000= $ 16.67
Working
Olympic Inc.
Variable Costing Income Statement
For Year Ended August 31
Sales $297,000
Variable cost of goods sold:
Variable cost of goods manufactured $288,000
Ending inventory (72,000)
Total variable cost of goods sold (216,000)
Manufacturing margin $81,000
Variable selling and administrative expenses (40,500)
Contribution margin $40,500
Fixed costs:
Fixed manufacturing costs $12,000
Fixed selling and administrative expenses 10,800
Total fixed costs (22,800)
Operating income $17,700
