Question
Play Time manufactures video games that it sells for $43 each. The company uses a fixed manufacturing overhead allocation rate of $4 per game. Assume
Play Time manufactures video games that it sells for
$43 each. The company uses a fixed manufacturing overhead allocation rate of $4
per game. Assume all costs and production levels are exactly as planned. The following data are from
Play Time's first two months in business during 2016:
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requirements
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Requirement 1. Compute the product cost per game produced under absorption costing and under variable costing.
| October 2016 | |
| Absorption | Variable |
| costing | costing |
Total product cost per game |
|
|
| October | November | ||
Sales | 2,000 | units | 2,900 | units |
Production | 2,800 | units | 2,800 | units |
Variable manufacturing cost per game | $12 |
| $12 |
|
Sales commission cost per game | 6 |
| 6 |
|
Total fixed manufacturing overhead | 11,200 |
| 11,200 |
|
Total fixed selling and administrative costs | 9,000 |
| 9,000 |
|
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