Reference no: EM132919467

Problem - LoneStar Co. is a manufacturing company that produces only one product, cowboy boots, has  -provided the following data concerning its operations in 2014 and 2015: 2014 was the company's ?rst year of operations. In 2014 the company produced 1,000 pairs of cowboy boots and sold 900 pairs. The company sold boots at $250 a pair. The company incurred the following costs in 2014: direct materials of $70 a pair, direct labor costs of $20 a pair, variable selling and administrative of $5 a pair, variable manufacturing overhead of $10 a pair, and ?xed manufacturing overhead of $20,000. Lastly, they paid $50,000 for ?xed selling and administrative expenses. In 2015, selling price and all costs remained the same except that direct material costs went up by $5 a pair. The company produced 2,000 pairs in 2015 and sold 1,500 pairs. LoneStar Co. uses FIFO inventory method (the oldest units are sold ?rst).

Required -

1. What is the unit product cost for 2014 and 2015 under variable costing?

2. What is the unit product cost for 2014 and 2015 under absorption costing?

3. What is the net operating income (NOI) for 2015 under variable costing?

4. Under absorption costing, how much of 2014 FMOH cost was recognized in COGS in 2015?