Reference no: EM131795683

Question - Sele Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2010, the company incurred the following costs.

Variable Cost per Unit

Direct materials $6.50

Direct labor $2.45

Variable manufacturing overhead $5.75

Variable selling and administrative expenses $3.90

Fixed Costs per Year

Fixed manufacturing overhead $282,150

Fixed selling and administrative expenses $240,100

Sele Company sells the fishing lures for $25. During 2010, the company sold 80,000 lures and produced 95,000 lures.

Instructions

(a) Assuming the company uses variable costing, calculate Sele's manufacturing cost per unit for 2010.

(b) Prepare a variable costing income statement for 2010.

(c) Assuming the company uses absorption costing, calculate Sele's manufacturing cost per unit for 2010.

(d) Prepare an absorption costing income statement for 2010.