*E19-17 Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.
|
Variable Cost per Unit |
|
|
Direct materials |
$7.50 |
|
Direct labor |
$2.45 |
|
Variable manufacturing overhead |
$5.75 |
|
Variable selling and administrative expenses |
$3.90 |
|
Fixed Costs per Year |
|
|
Fixed manufacturing overhead |
$234,650 |
|
Fixed selling and administrative expenses |
$240,100 |
Polk Company sells the fishing lures for $25. During 2012, the company sold 80,000 lures and produced 95,000 lures.
Instructions
(a) Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012.
(b) Prepare a variable costing income statement for 2012.
(c) Assuming the company uses absorption costing, calculate Polk’s manufacturing cost per unit for 2012.
(d) Prepare an absorption costing income statement for 2012.