Reference no: EM132911638

Question - Bright company manufactures and sells a single product. During the company's first year of operations the below costs were recorded:

Variable costs per unit:

Manufacturing:

Direct Materials $ 25

Direct Labour 12

Variable manufacturing overhead 3

Variable selling and administrative 5

Fixed costs per year:

Fixed manufacturing overhead $ 200,000

Fixed selling and administrative expense $ 110,000

During the year, the company produced 25,000 units and sold 21,000 units. The selling price of each unit was $65.

Required -

a. Compute the unit product cost assuming the company was using the absorption costing method.

b. Compute the unit product cost assuming the company was using the variable costing method and also prepare the income statement for the year based on the variable costing method.