Fiendish Friends makes Halloween costumes. The company incurred the following total costs to produce 28,000 costumes.
Direct materials . . . . . . . $280,000
Direct labor . . . . . . . 128,800
Variable overhead . . . . . . . 22,400
Fixed overhead . . . . . . . 84,000
Required
a. Under the absorption costing method, what is the average unit product cost? Using this method, how much product cost would be recorded on the income statement if 22,000 units were sold?
b. Under the variable costing method, what is the average unit product cost? Using this method, how much product cost would be recorded on the income statement if 22,000 units were sold?
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