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Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customer's ear. Cost data
Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customer's ear. Cost data for the product follow Variable costs per unit: $ 12 18 Direct materials Direct labour Variable factory overhead Variable selling and administrative Total variable costs per unit $ 44 Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative $145,600 127,400 Total fixed cost per month $273,000 The product sells for $60 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Units Units Produced Sold May June 18,200 14,600 18,200 21,800 Income statements prepared by the Accounting Department using absorption costing are presented below June Sales $876,000 $1,308,000 Cost of goods sold: Beginning inventory Add cost of goods manufactured 169,200 855,400 855,400 855,400 1,024,600 Goods available for sale Less ending inventory 169,200 686,200 189,800 Cost of goods sold 1,024,600 Gross margin 283,400
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