Columbia Products produced and sold 900 units of the company's only product in March. You have collected the following information from the accounting records Sales price (per unit)
Manufacturing costs $ 448
Fixed overhead 50,400
Direct labor (per unit) 35
Direct materials (per unit) 112
Variable overhead (per unit) 70 (for the month)
Marketing and administrative costs
Fixed costs (for the month) 67,500
Variable costs (per unit) 14
Required:
Compute the following:
1. Variable manufacturing cost per unit $217
2. Full cost per unit
3. Variable cost per unit
4. Full absorption cost per unit.
5. Prime cost per unit.
6, Conversion cost per unit.
7. Profit margin per unit
8. Contribution margin per unit
9. Gross margin per unit

Results are below.

Explanation:

Giving the following information:

Units produced and sold= 900

Sales price (per unit) $448

Manufacturing costs:

Fixed overhead 50,400

Direct labor (per unit) 35

Direct materials (per unit) 112

Variable overhead (per unit) 70 (for the month)

Marketing and administrative costs:

Fixed costs (for the month) 67,500

Variable costs (per unit) 14

a. Variable manufacturing cost= 35 + 112 + 70= $217

b. Total cost:

Total variable cost= (217 + 14)*900= 207,900

Total fixed cost= 50,400 + 67,500= 117,900

Total cost= $325,800

Total cost per unit= 325,800/900= $362

c. Total variable cost= 217 + 14= $231

d. The absorption costing method includes all costs related to production, both fixed and variable.

Absorption cost= 217 + (50,400/900)= $273

e. Prime cost= direct material + direct labor

Prime cost= 112 + 35= $147

f. Conversion cost= direct labor + unitary variable overhead

Conversion cost= 35 + 70= $105

g. Profit margin= selling price - total unitary cost

Profit margin= 448 - 362= $86

h. Contribution margin per unit= selling price - total unitary variable cost

Contribution margin per unit= 448 - 231= $217

j. Gross margin per unit= Selling price - absorption cost per unit

Gross margin per unit= 448 - 273= $175

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