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ACCT 386 - Week 4 - Homework - Question 2

ACCT 386 - Week 4 - Homework - Question 2
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ACCT 386 - Week 4 - Homework - Question 2

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Question 2

Nickelson Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:

 

 

 

  Variable costs per unit:

 

 

    Manufacturing:

 

 

      Direct materials

 

$21   

      Direct labor

 

$13   

      Variable manufacturing overhead

 

$8   

    Variable selling and administrative

 

$1   

  Fixed costs per year:

 

 

    Fixed manufacturing overhead

$

600,000   

    Fixed selling and administrative expenses

$

240,000   


During its first year of operations Nickelson produced 60,000 units and sold 60,000 units. During its second year of operations it produced 75,000 units and sold 50,000 units. In its third year, Nickelson produced 40,000 units and sold 65,000 units. The selling price of the company’s product is $57 per unit.