Posted: April 5th, 2016

Compute the unit cost for one knife set?

Sharpens Incorporated produces knife sets for use in commercial kitchens. They sell for $400.00 each.

Selected data for the company’s operations last year follow below.

Units in beginning inventory 0
Units produced 3000
Units sold 2500
Units in ending inventory 500

Variable cost per unit
Direct materials $120.00
Direct labor 80
Variable manufacturing overhead 40
Variable selling and administrative 20

Fixed costs
Fixed manufacturing overhead $ 300,000
Fixed selling and administrative $ 200,000

a. Assume that the company uses variable costing, compute the unit cost for one knife set? (Show all work)
b. Assuming that the company uses absorption costing, compute the unit cost for one knife set. (Please show all work so I am able to learn this stuff)

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