Reference no: EM131800499

Question - Great Outdoze, Inc. manufactures high-quality sleeping bags, which sell for $130 each. The variable costs of production are as follows:

Direct material ..................................... $40

Direct labor.......................................... $22

Variable manufacturing overhead......... $16

Budgeted fixed overhead in 20x4 was $400,000 and budgeted production was 25,000 sleeping bags. The year's actual production was 25,000 units, of which 22,000 were sold. Variable selling and administrative costs were $2 per unit sold; fixed selling and administrative costs were $60,000.

Assume that direct material is the only unit-level manufacturing cost.

The company has committed its spending for direct labor and overhead (variable and fixed).

Give an argument for and against throughput costing.