(30 min.) Components of Full Cost: Larcker Manufacturing. a. Variable cost: $21.00 + $24.00 + $12.00 + $5.00 = $62.00 b. Variable manufacturing cost: $21.00 + $24.00 + $12.00 = $57.00 c. Full-absorption cost: $21.00 + $24.00 + $12.00 + ($135,000 ÷ 30,000 units) = $61.50 2-44. (continued) d. Full cost: $21.00 + $24.00 + $12.00 + ($135,000 ÷ 30,000 units) + $5.00 + ($117,000 ÷ 30,000 units) = $70.40 e. Profit margin = Sales price full cost = $79.00 $70.40 = $8.60 – – f. Gross margin = Sales price full absorption cost = $79.00 $61.50 = $17.50 – – g. Contribution margin = Sales price variable cost = $79.00 $62.00 = $17.00 – – (20 Min.) Margin and Contribution Margin Income Statements: Larcker Manufacturing. Margin Income Statement Contribution Margin Income Statement revenue(a) Sales revenue 0 0 Variable manufacturing Variable manufacturing costs (b) 1,710,000 costs 1,710,000 Variable marketing and Fixed manufacturing administrative costs 150,000 overhead costs 135,000 Gross margin $525,000 Contribution margin $510,000 Variable marketing and Fixed manufacturing administrative costs (c) 150,000 overhead costs 135,000 marketing and marketing and administrative costs administrative costs 117,000 117,000 Operating profit $258,000 Operating profit $258,000 (a) $79 x 30,000 units = $2,370,000 (b) $57 x 30,000 units = $1,710,000; $57 = ($21 direct material + $24 direct labor + $12 variable manufacturing overhead). (c) $5 x 30,000 units = $150,000
(30 min.) Components of Full Cost: Larcker Manufacturing. a. Variable cost: $21.00 + $24.00 + $12.00 + $5.00 = $62.00 b. Variable manufacturing cost: $21.00 + $24.00 + $12.00 = $57.00 c. Full-absorption cost: $21.00 + $24.00 + $12.00 + ($135,000 ÷ 30,000 units) = $61.50 2-44. (continued) d. Full cost: $21.00 + $24.00 + $12.00 + ($135,000 ÷ 30,000 units) + $5.00 + ($117,000 ÷ 30,000 units) = $70.40 e. Profit margin = Sales price – full cost = $79.00 – $70.40 = $8.60 f. Gross margin = Sales price – full absorption cost = $79.00 – $61.50 = $17.50 g. Contribution margin = Sales price – variable cost = $79.00 – $62.00 = $17.00 (20 Min.) Margin and Contribution Margin Income Statements: Larcker Manufacturing. Margin Income Statement Contribution Margin Income Statement revenue(a) Sales revenue Variable manufacturing costs (b) 1,710,000 Variable manufacturing costs 1,710,000 Fixed manufacturing overhead costs 135,000 Variable marketing and administrative costs 150,000 Gross margin $525,000 Contribution margin $510,000 Variable marketing and administrative costs (c) 150,000 Fixed manufacturing overhead costs 135,000 marketing and administrative costs 117,000 marketing and administrative costs 117,000 Operating profit $258,000 Operating profit $258,000 (a) $79 x 30,000 units = $2,370,000 (b) $57 x 30,000 units = $1,710,000; $57 = ($21 direct material + $24 direct labor + $12 variable manufacturing overhead). (c) $5 x 30,000 units = $150,000 0 0