Mario Co. produces three products: LMC, DMC, KPC. For the coming year they expect to produce 160,000 units. Of these, 65,000 will be LMC, 40,000 will be DMC and 55,000 will be KPC. The following information was provided for the coming year:
Common fixed overhead is $984,000 and fixed selling and administrative expenses for Mario Co. is $881,000 per year.
Required:
A. Calculate the unit variable cost under variable costing.
B. Calculate the unit variable product cost.
C. Prepare a segmented variable-costing income statement for next year.
D. Should Mario Co. keep all product lines?

Question

Mario Co. produces three products: LMC, DMC, KPC. For the coming year they expect to produce 160,000 units. Of these, 65,000 will be LMC, 40,000 will be DMC and 55,000 will be KPC. The following information was provided for the coming year:
  Common fixed overhead is $984,000 and fixed selling and administrative expenses for Mario Co. is $881,000 per year.
Required:
A. Calculate the unit variable cost under variable costing.
B. Calculate the unit variable product cost.
C. Prepare a segmented variable-costing income statement for next year.
D. Should Mario Co. keep all product lines?

Quizplus · Accepted Answer

The Answer of Mario Co. produces three products: LMC, DMC, KPC. For the coming year they expect to produce 160,000 units. Of these, 65,000 will be LMC, 40,000 will be DMC and 55,000 will be KPC. The following information was provided for the coming year:
  Common fixed overhead is $984,000 and fixed selling and administrative expenses for Mario Co. is $881,000 per year.
Required:
A. Calculate the unit variable cost under variable costing.
B. Calculate the unit variable product cost.
C. Prepare a segmented variable-costing income statement for next year.
D. Should Mario Co. keep all product lines?

Mario Co Produces Three Products: LMC, DMC, KPC