Question

Cost of Goods Manufactured, using Variable Costing and Absorption Costing On March 31, the end of the first year of operations, Barnard Inc., manufactured 2,900 units and sold 2,500 units. The following income statement was prepared, based on the variable costing concept: Barnard Inc. Variable Costing Income Statement For the Year Ended March 31, 20Y1 Sales $925,000 Variable cost of goods sold: Variable cost of goods manufactured $516,200 Inventory, March 31 (71,200) Total variable cost of goods sold (445,000) Manufacturing margin $480,000 Total variable selling and administrative expenses (110,000) Contribution margin $370,000 Fixed costs: Fixed manufacturing costs $234,900 Fixed selling and administrative expenses 75,000 Total fixed costs (309,900) Operating income $60,100 Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept. Variable costing $ Absorption costing $

Answer 1

Answer:

$178

$259

Explanation:

The calculation of the variable costing concept and (b) the absorption costing concept is shown below:-

Cost of Goods Manufactured per unit = $516,200 ÷ 2,900

= $178

Fixed Manufacturing Overhead Per Unit = $234,900 ÷ 2,900

= $81

Variable Product cost Per Unit = Cost of Goods Manufactured per Unit

= $178

Absorption product cost per unit = $178 + $81

= $259