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Thoughput costing, Great Outdoze Inc. Cost per sleeping bag

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Great Outdoze, Inc. manufactures high-quality sleeping bags, which sell for $130 each. The variable
costs of production are as follows:
Direct material ........................................................................................................................................ $40
Direct labor ............................................................................................................................................ 22
Variable manufacturing overhead .............................................................................................................. 16
Budgeted fixed overhead in 20x4 was $400,000 and budgeted production was 25,000 sleeping
bags. The year's actual production was 25,000 units, of which 22,000 were sold. Variable selling and
administrative costs were $2 per unit sold; fixed selling and administrative costs were $60,000.

Refer to the information given in the preceding problem for Great Outdoze, Inc. Assume that direct
material is the only unit-level manufacturing cost. The company has committed its spending for direct
labor and overhead (variable and fixed).
Required:
1. Calculate the product cost per sleeping bag under throughput costing.
2. Prepare an income statement for the year 20x4 using throughput costing.
3. Give an argument for and against throughput costing

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Solution Summary

Your tutorial is in excel, attached, and gives you instructional comments to assist in how throughput is done so you can learn this.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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