Problem 1 On December 31. The end of the first year of operations, Frankenreiter Inc. manufactured 25,600 units and sold 24,000 units. 5 The following income statement was prepared, based on the variable costing concept: 5. 7 3 0 Frankenreiter Inc. Variable Costing Income Statement For the Year Ended December 31, 20Y1 $ $ 9,600,000 1 Sales 2 Variable Costs of Goods Sold 3 4 Variable Manufacturing costs less Ending Inventory 5 Total Variable COGS 6 Manufacturing Margin 8 Contribution margin 7 Less Variable Selling and Administrative Expenses 9 Less Fixed costs 0 1 Fixed manufacturing costs Fixed Selling and Administrative expenses 2 Total Fixed costs 3 Income from Operation 4 5 Required: 5,376,000 336000 5,040,000 4,560,000 1,150,000 3,410,000 1,664,000 890,000 2,554,000 856,000 6 Determine the unit costs of goods manufactured (COGM), based on: 7 A. Variable costing concept 8 B. Absorption costing concept 9 0 Solution: 1 A. Variable COGM per unit = 2 Variable COGM/ # of units produced 3 4 B. Absorpton costing COGM per unit = Siddique, Salina: Variable COGM include only variable manufacturing costs. $210.00 per unit Siddique, Salina: Under absorption costing, COGM includes both Varibale and Fixed manufacturing costs. 5 Absorption costing COGM/ # of units produced $275.00 per unit 6 7