Reference no: EM132923432

Question - 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 first 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 fixed manufacturing overhead of $20,000. Lastly, they paid $50,000 for fixed 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 first).

Required -

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

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

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

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