Answered: Engkobee Company sells a single product…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 13PA: Grainger Company produces only one product and sells that product for $100 per unit. Cost...

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Engkobee Company sells a single product for $25. It had no beginning inventories. Operating data
follow.
Sales, 27,000 units $675,000
Normal capacity 30,000 units
Production costs:
Variable per unit $13
Fixed production $150,000
Selling and administrative expenses:
Variable per unit sold $2
Fixed selling $20,000
Number of units produced 32,500 units
Assume the actual costs were as budgeted.

Requirements:
a. Find contribution margin per unit.

b. Compute the ending inventory under standard variable costing.

c. Compute the income under standard variable costing.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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