Reference no: EM13599051

Klumm 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 $6.50
• Direct labor $2.75

• Variable manufacturing overhead $5.75
• Variable selling and administrative expenses $3.90
• Fixed Costs per Year
• Fixed manufacturing overhead $285,000
• Fixed selling and administrative expenses $240,100

Klumm 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 Klumm's manufacturing cost per unit for 2011.

(b) Prepare a variable costing income statement for 2011.

(c) Assuming the company uses absorption costing, calculate Klumm's manufacturing cost per unit for 2011.

(d) Prepare an absorption costing income statement for 2011.