Calculate Product Cost and Prepare Income Statement Under Variable Costing
What are Bob's Company's manufacturing cost per unit for 2022 under variable costing? How can we prepare a variable-costing income statement for 2022?
Manufacturing Cost per Unit Calculation
Total variable manufacturing costs = Direct materials + Direct labor + Variable manufacturing overhead
Total variable manufacturing costs = $450,000 + $360,000 + $150,000
Total variable manufacturing costs = $960,000
To find the manufacturing cost per unit, we divide the total variable manufacturing costs by the number of lures produced:
Manufacturing cost per unit = Total variable manufacturing costs / Number of lures produced
Manufacturing cost per unit = $960,000 / 95,000
Manufacturing cost per unit ≈ $10.11
Therefore, Bob's manufacturing cost per unit for 2022 is approximately $10.11.
Preparing Variable-Costing Income Statement
To prepare a variable-costing income statement for 2022, we need to consider the variable costs and the variable selling and administrative expenses. The given information is:
First, we calculate the total variable costs:
Total variable costs = Variable manufacturing costs + Variable selling and administrative expenses
Total variable costs = $960,000 + $420,000
Total variable costs = $1,380,000
Next, we calculate the total variable sales revenue:
Total variable sales revenue = Selling price per unit * Number of lures sold
Total variable sales revenue = $25 * 80,000
Total variable sales revenue = $2,000,000
Now, we can prepare the variable-costing income statement:
Variable-Costing Income Statement for 2022:
Sales revenue: $2,000,000
Variable costs:
- Variable manufacturing costs: $960,000
- Variable selling and administrative expenses: $420,000
Total variable costs: $1,380,000
Contribution margin: Sales revenue - Total variable costs
Contribution margin: $2,000,000 - $1,380,000 = $620,000
Fixed costs: Not provided in the information
Net income: Contribution margin - Fixed costs (not provided)
Please note that the fixed costs are not given in the information, so we cannot calculate the net income without that information.
In summary, the manufacturing cost per unit for 2022 is approximately $10.11. The variable-costing income statement for 2022 includes sales revenue, variable costs (manufacturing costs and selling/administrative expenses), contribution margin, and net income (which cannot be calculated without information on fixed costs).