Cost of Goods Manufactured, using Variable Costing and Absorption CostingOn March 31, the end of the first month of operations, Barnard Inc. manufactured 15,000 units and sold 12,000 units. The following income statement was prepared, based on the variablecosting concept:Barnard Inc.Variable Costing Income StatementFor the Year Ended March 31, 20Y1Sales$2,160,000Variable cost of goods sold:Variable cost of goods manufactured$1,620,000Inventory, March 31(324,000)Total variable cost of goods sold(1,296,000)Manufacturing margin$864,000Total variable selling and administrative expenses(96,000)Contribution margin$768,000Fixed costs:Fixed manufacturing costs$210,000Fixed selling and administrative expenses45,000Total fixed costs(255,000)$513,000Operating incomeDetermine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.

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Asked Nov 12, 2019
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Cost of Goods Manufactured, using Variable Costing and Absorption Costing
On March 31, the end of the first month of operations, Barnard Inc. manufactured 15,000 units and sold 12,000 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
$2,160,000
Variable cost of goods sold:
Variable cost of goods manufactured
$1,620,000
Inventory, March 31
(324,000)
Total variable cost of goods sold
(1,296,000)
Manufacturing margin
$864,000
Total variable selling and administrative expenses
(96,000)
Contribution margin
$768,000
Fixed costs:
Fixed manufacturing costs
$210,000
Fixed selling and administrative expenses
45,000
Total fixed costs
(255,000)
$513,000
Operating income
Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.
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Cost of Goods Manufactured, using Variable Costing and Absorption Costing On March 31, the end of the first month of operations, Barnard Inc. manufactured 15,000 units and sold 12,000 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 $2,160,000 Variable cost of goods sold: Variable cost of goods manufactured $1,620,000 Inventory, March 31 (324,000) Total variable cost of goods sold (1,296,000) Manufacturing margin $864,000 Total variable selling and administrative expenses (96,000) Contribution margin $768,000 Fixed costs: Fixed manufacturing costs $210,000 Fixed selling and administrative expenses 45,000 Total fixed costs (255,000) $513,000 Operating income Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.

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Expert Answer

Step 1

Variable Costing:

Variable costing is a concept used in managerial and cost accounting in which the fixed manufactured overhead is excluded from the product while calculating cost of production.

Absorption Costing:

Absorption costing is a cost accounting method for valuing inventory. Absorption costing includes or “absorbs” all the costs of manufacturing a product.

Step 2

Following are the computation of uni...

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Computation of unit cost of goods manufacture Variable Costing Particulars Absorption Costing Variable cost of goods manufactured $1,620,000 $108 $108 15,000 units Fixed manufacturing costs $210,000 $14 15,000 units Unit cost of goods manufactured $108 $122

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