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Hello sir,
I’m having a difficulty in answering these two questions.Question 1:
A company manufactures a single product which is sold for $70.00 per unit. Unit costs are:$ / Unit
Variable production 29.50
Fixed production 21.00
Variable selling 4.80
Fixed selling 9.0020,000 units of the product were manufactured in a period during which 19,700 units were sold.
Using marginal costing, what was the total contribution made in the period?Question 2:
A company manufactures a single product. Unit costs of the product are:$ per unit
Variable production 14.75
Fixed production 8.10
Variable selling 2.40
Fixed selling 5.35400,000 units of the product were manufactured in a period, during which 394,000 units were sold. There was no inventory of the product at the beginning of the period.
Using marginal costing, what is the total value of the finished goods inventory at the end of the period?Looking forward to the reply. Thank you for the help.
Question 1:
The contribution per unit os 70 – 29.50 – 4.80 = 35.70
19,700 units are sold.
So the total contribution is 19,700 x $35.70 = $703,290Question 2:
The marginal cost per unit is 14.75 (only production costs are included in inventory values)
If the produced 400,000 and sold 394,000 then there are 6,000 left in inventory.
So the total value of the inventory is 6,000 x $14.75 = $88,500
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