Masley Corporation has provided the following data for its two most recent years of operation:?Variable manufacturing cost per unit produced:??Direct materials$13?Direct labor$6?Variable manufacturing overhead$4?Fixed manufacturing overhead per year$140,000In Year 1, 10,000 units were produced and in Year 2, 7,000 units were produced.Required:a. Assume the company uses absorption costing. Compute the unit product cost in each year.B. Assume the company uses variable costing. Compute the unit product cost in each year.
What will be an ideal response?
a. Absorption costing unit product costs:
| ? | ? | Year 1 | Year 2 |
| ? | Direct materials | $13 | $13 |
| ? | Direct labor | 6 | 6 |
| ? | Variable manufacturing overhead | 4 | 4 |
| ? | Fixed manufacturing overhead ($140,000 ÷ 10,000 units produced; $140,000 ÷ 7,000 units produced) | 14 | 20 |
| ? | Absorption costing unit product cost | $37 | $43 |
b. Variable costing unit product costs:
| ? | ? | Year 1 | Year 2 |
| ? | Direct materials | $13 | $13 |
| ? | Direct labor | 6 | 6 |
| ? | Variable manufacturing overhead | 4 | 4 |
| ? | Variable costing unit product cost | $23 | $23 |
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