Quarryman Corporation Case SP 2020
Part I: Quarryman Corporation manufactures and sells 50-inch electronic products that can do just about anything any electronic device can do. They use a standard cost system. Actual data relating to January, February, and March 2020 are as follows:
|Var. Manufacturing Cost
per unit produced
|Var. Marketing cost per unit sold||$700||$700||$700|
|Marketing and Admin Costs||$160,000||$160,000||$160,000|
The selling price per unit is $3,300. The budgeted level of production used to calculate the budgeted fixed manufacturing costs per unit was 1,600 units in January, 1,500 units in February, and 1,600 units in March.They were so accurate at predicting their costs there are no price, efficiency, spending or volume variances. They set standard costs each month. In other words, when using absorption costing, they accurately determined they would produce 1,600 units in January, 1,500 in February and 1,600 in March.
To keep it simple you can assume that the cost of product sold per unit in February and March is the same as cost of units produced during that month. In other words, you do not need to assume that 100 of the units sold in February were sold at January’s cost per unit, and the same goes for March. This is the same as assuming the firm is using the LIFO inventory assumption.
Part II: The variable manufacturing costs per unit of Quarryman Corporation are as follows:
|Direct materials cost per unit||$535||$535||$535|
|Direct manufacturing labor cost per unit||$190||$190||$190|
|MOH cost per unit||$275||$275||$275|
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