Reference no: EM133033581

Question - Cinnabar, Inc. has provided the following data for the year:

Direct materials $10 per unit

Direct labor $15 per unit

Variable manufacturing overhead $20 per unit

Fixed manufacturing overhead $25,000 per year

Fixed selling and administrative costs $15,000 per year

Sales price $75 per unit

Beginning Finished Goods Inventory 500 units

Units produced 5,000 units

Units sold 4,500 units

Requirements -

a) Compute Cinnabar's unit product cost under absorption costing and variable costing.

b) Prepare income statements for Cinnabar using absorption costing and variable costing.

c) Calculate the balance in Finished Goods Inventory using absorption costing and variable costing.

Assume that the production level, costs, and sales prices were the same in the previous year.