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    Cost Accounting Chapter 2 Assignment #2

    Uploaded by

    Tawan Vihokratana
    Columbia Products produced 900 units of its only product in March. Accounting records provide information on sales price, manufacturing costs including fixed and variable overhead, direct labor and materials, and marketing/administrative costs. Based on this information, the document computes various per unit costs including variable manufacturing cost of $217, full cost of $362, variable cost of $231, and profit margin of $86.

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    Cost Accounting Chapter 2 Assignment #2

    Uploaded by

    Tawan Vihokratana
    81 views3 pages
    Columbia Products produced 900 units of its only product in March. Accounting records provide information on sales price, manufacturing costs including fixed and variable overhead, direct labor and materials, and marketing/administrative costs. Based on this information, the document computes various per unit costs including variable manufacturing cost of $217, full cost of $362, variable cost of $231, and profit margin of $86.

    Original Description:

    Fundamentals of Cost Accounting, William Lanen, 6th edition

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    Columbia Products produced 900 units of its only product in March. Accounting records provide information on sales price, manufacturing costs including fixed and variable overhead, direct labor and materials, and marketing/administrative costs. Based on this information, the document computes various per unit costs including variable manufacturing cost of $217, full cost of $362, variable cost of $231, and profit margin of $86.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    81 views3 pages

    Cost Accounting Chapter 2 Assignment #2

    Uploaded by

    Tawan Vihokratana
    Columbia Products produced 900 units of its only product in March. Accounting records provide information on sales price, manufacturing costs including fixed and variable overhead, direct labor and materials, and marketing/administrative costs. Based on this information, the document computes various per unit costs including variable manufacturing cost of $217, full cost of $362, variable cost of $231, and profit margin of $86.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

     

    2. Award: 18 out of 18.00 points


     

    Columbia Products produced and sold 900 units of the company’s only product in March. You have
    collected the following information from the accounting records:

    Sales price (per unit) $ 448


    Manufacturing costs:
    Fixed overhead (for the month) 50,400
    Direct labor (per unit) 35
    Direct materials (per unit) 112
    Variable overhead (per unit) 70
    Marketing and administrative costs:
    Fixed costs (for the month) 67,500
    Variable costs (per unit) 14

    Required:
    a. Compute the following:

    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 

    References

    Worksheet Learning Objective:


    02-01 Explain the
    basic concept of
    "cost."

    Difficulty: 2 Learning Objective:


    Medium 02-06 Identify the
    components of a
    product’s costs.
     

    Columbia Products produced and sold 900 units of the company’s only product in March. You have
    collected the following information from the accounting records:

    Sales price (per unit) $ 448


    Manufacturing costs:
    Fixed overhead (for the month) 50,400
    Direct labor (per unit) 35
    Direct materials (per unit) 112
    Variable overhead (per unit) 70
    Marketing and administrative costs:
    Fixed costs (for the month) 67,500
    Variable costs (per unit) 14

    Required:
    a. Compute the following:

    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:

    a.
    Amounts per unit:
    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 costs
    Unit 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

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