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 $8.10
Direct labor $2.65
Variable manufacturing overhead $6.21
Variable selling and administrative expenses $4.21
Fixed Costs per Year
Fixed manufacturing overhead $254,184
Fixed selling and administrative expenses $259,308
Polk Company sells the fishing lures for $27.00. During 2012, the company sold 80,300 lures and produced 95,200 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.