B D E G H K Problem 1 On December 31. The end of the first year of operations, Frankenreiter Inc. manufactured 25,600 units and sold 24,000 units. The following income statement was prepared, based on the variable costing concept: 9,600,000 Frankenreiter Inc. Variable Costing Income Statement For the Year Ended December 31, 20Y1 D S S 1 Sales 2 Variable costs of Goods Sold 3 Variable Manufacturing costs 5,376,000 4 less Ending Inventory 336000 Total Variable COGS Manufacturing Margin Less Variable Selling and Administrative Expenses Contribution margin 9 Less Fixed costs D Fixed manufacturing costs 1,664,000 1 Fixed Selling and Administrative expenses 890,000 2 Total Fixed costs Income from Operation 5,040,000 4,560,000 1,150,000 3,410,000 2,554,000 856,000 Siddique, Salina: Variable COGM indude only variable manufacturing costs. 5 Required: Determine the unit costs of goods manufactured (COGM), based on: A. Variable costing concept B. Absorption costing concept 9 Solution: 1 A. Variable COGM per unit = 2 Variable COGM # of units produced 3 4 B. Absorpton costing COGM per unit Absorption costing COGM/# of units produced per unit Siddique, Salina: Under absorption casting, COGM includes both Varibale and Fixed manufacturing costs. per unit B