(Absorption and Variable Costing) Burchell Products sells a product for $25. Unit-level manufacturing costs for each unit are as follows:
- Direct materials, $5.00
- Direct manufacturing labour, $4.50
- Variable manufacturing overhead, $3.25
Marketing expenses are $1.50 per unit plus $35,000 per year. Total fixed manufacturing overhead costs are $60,000 per year. The current production level is 25,000 units per year and the company is budgeting for the sale of 22,000 units in the next year.
- Prepare a budgeted statement of comprehensive income for the year using variable costing.
- Prepare a budgeted statement of comprehensive income for the year using absorption costing.