Student Name: Managerial Accounting - PMBA II

Student Number: Assignment # 8

Question # 1:
Unile Auto produces and sells an auto part for $60.00 per unit. In 2015, 100,000 parts were produced and 75,000 units were
sold. Other information for the year includes:
Direct materials $20.00 per unit
Direct manufacturing labor $ 4.00 per unit
Variable manufacturing costs $ 1.00 per unit
Sales commissions $ 6.00 per part
Fixed manufacturing costs $750,000 per year
Administrative expenses, all fixed $270,000 per year

What is the inventoriable cost per unit using variable costing?

Answer: Variable costing considers all variable manufacturing costs as inventoriable costs. Therefore, in this case, direct
materials, direct manufacturing labor, and variable manufacturing costs will be considered as inventoriable cost. The total
inventoriable cost is $25 ($20 + $4 + $1).

What is the inventoriable cost per unit using absorption costing?

Answer: Absorption costing considers all variable manufacturing costs and all fixed manufacturing costs as inventoriable costs.
Therefore, in this case, direct materials, direct manufacturing labor, variable manufacturing costs, and fixed manufacturing costs
will be considered as inventoriable cost.
The total inventoriable cost is $32.50 ($20 + $4 + $1 + $7.5*).
* $750,000 / 100,000 = $7.5 per unit

Question # 2:

1
Student Name: Managerial Accounting - PMBA II
Student Number: Assignment # 8

Answer:

2
Student Name: Managerial Accounting - PMBA II
Student Number: Assignment # 8

3
Student Name: Managerial Accounting - PMBA II
Student Number: Assignment # 8

Question # 3:
Throughput costing. The variable manufacturing costs per unit of Nascar Motors are as follows:

1.Prepare income statements for Nascar Motors in April and May of 2011 under throughput costing.
2.Contrast the results in requirement 1 with those in requirement 1 of Question # 2
3.Give one motivation for Nascar Motors to adopt throughput costing

Answer: