Question 5: Polk Company Builds Custom Fishing Lures For Spo

Question

Question 5polk Company Builds Custom Fishing Lures For Sporting Goods Question 5polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs. Variable Cost per Unit: Direct materials $7.73, Direct labor $2.52, Variable manufacturing overhead $5.92, Variable selling and administrative expenses $4.02. Fixed Costs per Year: Fixed manufacturing overhead $241,046, Fixed selling and administrative expenses $247,303. Polk Company sells the fishing lures for $25.75. During 2012, the company sold 80,400 lures and produced 94,900 lures. (a) Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g., 10.50.) Manufacturing cost per unit: $. Prepare a variable costing income statement for 2012.

Dr. Jack HW Helper · Accepted Answer

In analyzing the financial performance of Polk Company during its inaugural year in 2012, it is essential to determine its manufacturing cost per unit under variable costing and then prepare a corresponding income statement. These calculations provide insights into the company's cost management, pricing strategies, and profitability. Calculation of Manufacturing Cost Per Unit Using Variable Costing Variable costing includes all variable production costs—direct materials, direct labor, and variable manufacturing overhead—per unit. Fixed manufacturing overheads are treated as period costs and are expensed in the period incurred, hence not included in the per-unit manufacturing cost. Given data per unit: Direct Materials: $7.73 Direct Labor: $2.52 Variable Manufacturing Overhead: $5.92 Total variable manufacturing cost per unit is calculated as: Total Variable Cost per Unit = $7.73 + $2.52 + $5.92 = $16.17 Therefore, the manufacturing cost per unit for Polk Company in 2012, under variable costing, is $16.17. Variable Costing Income Statement for 2012 The income statement summarizes revenues, variable costs, contribution margin, fixed costs, and net income. Using the provided data: Number of units sold: 80,400 Selling price per unit: $25.75 Total sales: 80,400 units * $25.75 = $2,069,100 Total variable manufacturing costs (cost of goods sold): 80,400 units * $16.17 = $1,300,938 Variable selling and administrative expenses: 80,400 units * $4.02 = $323,208 Contribution margin is sales minus all variable expenses: Contribution Margin = $2,069,100 - ($1,300,938 + $323,208) = $2,069,100 - $1,624,146 = $444,954 Fixed costs include fixed manufacturing overhead and fixed selling & administrative expenses, totaling: Fixed manufacturing overhead: $241,046 Fixed selling & administrative expenses: $247,303 Total fixed costs: $488,349 Net income is calculated as: Net Income = Contribution Margin - Total Fixed Costs = $444,954 - $488,349 = -$43,395 This indicates a loss for P

Question 5: Polk Company Builds Custom Fishing Lures For Spo

Question 5polk Company Builds Custom Fishing Lures For Sporting Goods

Paper For Above instruction

Calculation of Manufacturing Cost Per Unit Using Variable Costing

Variable Costing Income Statement for 2012

Conclusion

References