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Honda Heaven produces and sells an auto part for $20.00 per unit. Direct materials are $8 per unit, while direct manufacturing labour averages $1.50 per unit. Variable manufacturing overhead is $0.50 per unit and fixed manufacturing overhead is $250,000 per year. Administrative expenses, all fixed, run $90,000 per year, with sales commissions of $2 per part. Production is 100,000 parts per year. And this year, 75,000 boxes were sold.
Problem 1: What is Honda Heaven's inventory cost per box using variable costing?
Problem 2: What is Honda Heaven's inventoriable cost per box using absorption costing?
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