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How to find the answer for the below questions when asked :
1.What was the variable production cost per unit & total fixed costs per month be over three month period? and ;
2.What would the estimated total cost in month 4 be if 12,500 units are manufactured?whether same manner to find the profit (loss) per unit and contribution per unit ?
Refer below question
A company which has been in existence for several years, manufactures a single product with a unit selling price of $34.Production and sales volumes of the product over a three month period have been :
Month 1 month2 month 3
Production (unit) 12,000 10,500 10,000
Sales (unit) 12,000 10,000 11,000Total production costs per unit over the 3 months period were $23.75,$25 and $25.50 respectively.
Variable production costs per unit, and fixed production costs per month, were the same throughout the period. Selling and administration overheads totalled $87,000 in each month.answers : 15 for variable production cost per unit
answers : 192,000 for total fixed costs per month
answers : 379,500 estimated total cots in month 4 if 12,500 units are manufacturedThis is not an absorption/marginal question.
It is testing on the high/low method of cost estimation, which you can find at the end of chapter 4 of the course notes, and repeated again in chapter 17.
this question asked in review question of marginal costing, it may be wrong to disclose ,thanks inform
Hi Sir
I have this question, A company produced 5000 unit of Product B last month, the opening and closing inventory is 400 units and 900 units respectively. The selling price and production B were as follow; selling price £20, direct cost £6, variable production overhead cost £3.50, fixed production overhead cost £5.90, Gross Profit £4.60
I worked this – Sales 5,000 x £20 = 100,000, less: cost of sales – opening inventory 400 x £15.40 = £6160, Production 5000 x £15.40 = £77000,
closing inventory 900 x £15.40 = £13, 860My answer is £30,700 but the correct answer is £20,700. Could you please what I have done wrong.
Thank you in advance.
But you have not told me what the question asked for!
Did they want the profit using absorption costing or the profit using marginal costing?
The profit per unit = 20 – 6 – 3.50 – 5.90 = $4.60
The number of units sold = 400 + 5000 – 900 = 4,500
So the profit is 4,500 x $4.60 = 20,700
(What you did would have been fine except that they did not sell 5,000 – they only sold 4,500 (they produced 5,000 but 500 of them were used to increase the inventory))
hi sir, I did tried to do this questions but there are two questions not able answer and hope you can please give some advise to complete it:
refer my above question
question 1
assuming that the fixed production overheads absorption rate is based upon normal production of 12,000 units per month, what will be the profit for month 2 using the absorption costing method?
answer is 2,375question 2
what would the profit for month 3 be using the marginal costing?
answer is 17,000thank you
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