Penna Corporation produces a single product and has the following cost structure:
| Number of units produced each year | 1,000 |
| Variable costs per unit: | |
| Direct materials | $40 |
| Direct labor | $16 |
| Variable manufacturing overhead | $1 |
| Variable selling and administrative expenses | $1 |
| Fixed costs per year: | |
| Fixed manufacturing overhead | $12,000 |
| Fixed selling and administrative expenses | $34,000 |
Required:
a. Compute the unit product cost under absorption costing. Show your work! (5 points)
b. Compute the unit product cost under variable costing. Show your work! (5 points)