Matts Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2011, 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
Matts Company sells the fishing lures for $25. During 2011, the company sold 80,000 lures and produced 95,000 lures.
Instructions
(a) Assuming the company uses variable costing calculate Matts manufacturing cost per unit for 2011.
(b) Prepare a variable costing income statement for 2011.
(c) Assuming the company uses absorption costing calculate Matts manufacturing cost per unit for 2011.
(d) Prepare an absorption costing income statement for 2011.