1) Sales

2014 2015 2016

$2,204,000 $2,760,800 $2,797,440

2) Cost of manufactured
2014 2015 2016
Direct Materials $ 3.00 $ 3.00 $ 4.00
Direct Labour $ 2.00 $ 2.00 $ 3.00
Variable manufacuturing overhead $ 4.00 $ 4.00 $ 4.00
Fixed manufacuturing overhead (Fixed
manufacuturing overhead/Product units) $ 8.40 $ 7.00 $ 10.00
total Cost of manufactured units $ 17.40 $ 16.00 $ 21.00
Total cost of manufactured $ 1,496,400.00 $ 1,651,200.00 $ 1,517,040.00
Cost of goods avaiable for sale $ 1,496,400.00 $ 1,825,200.00 $ 1,805,040.00

3) Ending Inventory
2014 2015 2016
Ending Inventory $ 174,000.00 $ 288,000.00 0

4) Cost of goods sold

2014 2015 2016
$ 1,322,400.00 $ 1,537,200.00 $ 1,805,040.00

6)Selling and Administration expenses

2014 2015 2016
$ 500,000.00 $ 596,000.00 $ 571,200.00

Variable
2) Cost of manufactured
2014 2015 2016
Direct Materials $ 3.00 $ 3.00 $ 4.00
Direct Labour $ 2.00 $ 2.00 $ 3.00
Variable manufacuturing overhead $ 4.00 $ 4.00 $ 4.00
total Cost of manufactured units $ 9.00 $ 9.00 $ 11.00
Total cost of manufactured $ 774,000.00 $ 928,800.00 $ 794,640.00
Cost of goods avaiable for sale $ 774,000.00 $ 1,018,800.00 $ 956,640.00

3) Ending Inventory
2014 2015 2016
Ending Inventory $ 90,000.00 $ 162,000.00 0

4) Cost of goods sold

2014 2015 2016
$ 684,000.00 $ 856,800.00 $ 956,640.00

6)Selling and Administration expenses

2014 2015 2016
Variable $ 380,000.00 $ 476,000.00 $ 451,200.00

Fixed costs
Fixed manufacturing overhead 722,400 722,400 722,400
Fixed selling and administration 120,000 120,000 120,000
Total 842,400 842,400 842,400
 Absorption
Sales $2,204,000 $2,760,800 $2,797,440
Cost of goods sold
Beginning inventory January 1 $ 174,000.00 $ 288,000.00
Add:costof goods manufactured $ 1,496,400.00 $ 1,651,200.00 $ 1,517,040.00
Cost of goods availabble for sale $ 1,496,400.00 $ 1,825,200.00 $ 1,805,040.00
less:ending inventoryDec 31 $ 174,000.00 $ 288,000.00 $ -
$ 1,322,400.00 $ 1,537,200.00 $ 1,805,040.00
Gross Profit $ 881,600.00 $ 1,223,600.00 $ 992,400.00

Selling and adminsitration expenses $ 500,000.00 $ 596,000.00 $ 571,200.00

Operating income/loss $ 381,600.00 $ 627,600.00 $ 421,200.00

Variable
Sales $2,204,000 $2,760,800 $2,797,440
Variable costs
Cost of goods sold
Beginning inventory January 1 0 $ 90,000.00 $ 162,000.00
Add:costof goods manufactured $ 774,000.00 $ 928,800.00 $ 794,640.00
Cost of goods availabble for sale $ 774,000.00 $ 1,018,800.00 $ 956,640.00
less:ending inventoryDec 31 $ 90,000.00 $ 162,000.00 $ -
$ 684,000.00 $ 856,800.00 $ 956,640.00
Selling and administration $ 380,000.00 $ 476,000.00 $ 451,200.00
total variable costs $ 1,064,000.00 $ 1,332,800.00 $ 1,407,840.00
contribution margin $ 1,140,000.00 $ 1,428,000.00 $ 1,389,600.00
less:fixed costs 842,400 842,400 842,400
operating income/(loss) 297,600 585,600 547,200

Variable costing income $ 297,600 $ 585,600 $ 547,200

Deferred manufacturing overhead $ 84,000 $ 126,000 $ -
released manufacturing overhead $ 84,000 $ 126,000
Absoprtion costing income $ 381,600 $ 627,600 $ 421,200
$ - $ - $ -

2014 2015 2016

Volume variances $ - Neither $ 144,480.00 F $ 115,584.00 U

2014 2015 2016

Production in units 86,000 103,200 72,240
Pre-determined overhead rate $ 8.40 $ 8.40 $ 8.40
Overhead applied during the year $ 722,400.00 $ 866,880.00 $ 606,816.00
Actual overhead $ 722,400.00 $ 722,400.00 $ 722,400.00
Volume variance $ - $ 144,480.00 $ (115,584.00)

fixed costs 722,400

budgeted production 86000
predetermined rate 8.4
 Unadjusted Trial Balance
Cash 75300
Accounts receivable 4000
Office supplies 1500
Prepaid insurance 6000
Equipment 14400
Land 15000
Accounts payable 200
Utilities payable 300
Unearned revenue 1400
Notes payable 35000
Washington Capital 64000
Washington Withdrawals 3000
Service revenue 23000
Salaries expense 3000
Rent expense 600
Utilities expense 300
Advertising expense 800
Total 123900 123900
Direct materiald cost 89 57 60
direct labor costs 16 26 8
manufacturing overhead costs 48 78 24
Total manufacturing costs 153 161 92
Units produced 125 150 140
total mfr cost per unit 1.22 1.07 0.66

During July 2017, the company incurred $ 150 million of manufacturing overhead costs, which
includes a$ 15 million fixed costcomponent thatwill not fluctuatewith changes in monthly
production volume. Thisamount, whichhasbeen allocated to the total manufacturing costs of
producing each product,affectsthetotal manufacturing cost per unit amounts as calculated in
requirement 1.Given the production volumeincreasein August 2017, using the total manufacturing
cost per unitamounts calculated for July 2017 will result in an overestimation of total
manufacturing costs for August