Siren Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2020, the company incurred the following costs.
Variable Costs per Unit
Direct materials …………………………………………………. $7.50
Direct labor ……………………………………………………….. $3.45
Variable manufacturing overhead ……………………… $5.80
Variable selling and administrative expenses ……. $3.90
Fixed Costs per Year
Fixed manufacturing overhead …………………………. $225,000
Fixed selling and administrative expenses ……….. $210,100
Siren Company sells the fishing lures for $25. During 2020, the company sold 80,000 lures and produced 90,000 lures.
Instructions
a. Assuming the company uses variable costing, calculate Siren’s manufacturing cost per unit for 2020.
b. Prepare a variable costing income statement for 2020.
c. Assuming the company uses absorption costing, calculate Siren’s manufacturing cost per unit for 2020.
d. Prepare an absorption costing income statement for 2020.
