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*will someone please explain/show the steps in this process for me? Thank you so much! Amy company...

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Accounting

*will someone please explain/show the steps in this process forme? Thank you so much!

Amy company produces and sells a toy for $205 per unit. In thefirst year of operations, 100,000 units were produced and 75,000were sold. other information for the year includes:

direct materials $31 per unit

direct manufacturing labor $3 per unit

variable manufacturing overhead costs $4 per unit

sales selling expenses $4 per unit

total fixed manufacturing costs $1,250,000

total fixed administrative expenses $950,000

a. compute the contribution margin per unit

Answer $163

b. then compute the inventoriable cost per unit under absorptioncosting

Answer $50.50

c. and finally, compute the inventoriable cost per unit undervariable costing

Answer $38.00

Answer & Explanation Solved by verified expert
3.7 Ratings (488 Votes)

`
Contribution Margin per unit
a) Sales Price Per Unit $                 205.00
Less: Variable Cost
Direct Material $                    31.00
Direct Manufacturing Labor $                      3.00
Variable manufacturing overhead cost $                      4.00
Sales selling expense per unit $                      4.00
Total Variable cost $                   42.00
contribution Margin per unit $                 163.00
Inventories cost per unit under Absorption Costing
b)
Production 100000
Sales 75000
* Variable Manufacturing Cost=(A) $                    38.00
Fixed Manufacturing Cost=Fixed Production Cost/Production=(B)($1250000/100000) $                    12.50
Unit Product Cost=Variable Manufacturing cost+Fixed Manufacturing cost=(A)+(B) $                    50.50
Variable Manufacturing cost=Direct Material cost,Direct Labor cost and Variable manufacturing overhead=($31+$3+$4)
c ) Inventories cost per unit under variable costing
Direct Material $                    31.00
Direct Manufacturing labor cost $                      3.00
Variable Manufacturing cost $                      4.00
Cost of goods sold   $                    38.00

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