Frames, inc. picture frames each require $19 of direct materials and $40 of direct labor. variable manufacturing overhead cost is $9 per frame and variable selling and administrative expense is $13 per frame sold

General
1

frames, inc. picture frames each require $19 of direct materials and $40 of direct labor. variable manufacturing overhead cost is $9 per frame and variable selling and administrative expense is $13 per frame sold. total fixed manufacturing overhead cost per month is 15,000 and the company produces 5,000 frames each month. the unit product cost of each frame using variable costing is

2

What is the unit product cost of each frame using variable costing?

Answer:
To calculate the unit product cost of each frame using variable costing, we need to consider the variable costs associated with production. The variable costs include direct materials, direct labor, variable manufacturing overhead, and variable selling and administrative expenses.

Given the following information:

  • Direct materials per frame: $19
  • Direct labor per frame: $40
  • Variable manufacturing overhead cost per frame: $9
  • Variable selling and administrative expense per frame: $13

First, let’s calculate the total variable cost per frame:
Total Variable Cost per Frame = Direct Materials + Direct Labor + Variable Manufacturing Overhead Cost + Variable Selling and Administrative Expense
Total Variable Cost per Frame = $19 + $40 + $9 + $13
Total Variable Cost per Frame = $81

Since the total fixed manufacturing overhead cost per month is $15,000 and the company produces 5,000 frames each month, we can calculate the fixed manufacturing overhead cost per frame:
Fixed Manufacturing Overhead Cost per Frame = Total Fixed Manufacturing Overhead Cost / Number of Frames Produced
Fixed Manufacturing Overhead Cost per Frame = $15,000 / 5,000 frames
Fixed Manufacturing Overhead Cost per Frame = $3

Now, we can calculate the unit product cost of each frame using variable costing:
Unit Product Cost per Frame = Total Variable Cost per Frame + Fixed Manufacturing Overhead Cost per Frame
Unit Product Cost per Frame = $81 + $3
Unit Product Cost per Frame = $84

Therefore, the unit product cost of each frame using variable costing is $84.