Question

Columbia Products produced and sold 1,400 units of the company’s only product in March. You have collected the following information from the accounting records:
Sales price (per unit) $129
Manufacturing costs:
Fixed overhead (for the month) 16,800
Direct labor (per unit) 7
Direct materials (per unit) 31
Variable overhead (per unit) 26
Marketing and administrative costs:
Fixed costs (for the month) 22,400
Variable costs (per unit) 4

Compute the following:
a. Variable manufacturing cost per unit.
b. Full cost per unit.
c. Variable cost per unit.

Answer 1

The computation of the following costs by Columbia Products is as follows:

a. Variable manufacturing cost per unit is $64.

b. Full cost per unit is $96, including manufacturing and marketing and administrative costs.

c. The variable cost per unit is $68.

Data and Calculations:

Production and sales units in March = 1,400 units

Sales price (per unit) = $129

Manufacturing costs:

Fixed overhead (for the month) = $16,800

Direct labor (per unit) =              $7

Direct materials (per unit)          31

Variable overhead (per unit)    26

Variable manufacturing cost $64

The Fixed cost per unit = $12 ($16,800/1,400)

The total manufacturing cost per unit = $76 ($64 + $12)

Marketing and administrative costs:

Fixed costs (for the month) = $22,400

Variable costs (per unit)  = $4

Fixed costs per unit =        $16 ($22,400/1,400)

The total marketing and administrative costs per unit = $20 ($4 + $16)

Full cost per unit = $96 ($76 + $20)

Variable cost per unit = $68 ($64 + $4)

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