Munn Bicycle Company manufactures bicycles specifically for college campuses. They sell for $100 and are very sturdy, with built-in saddlebags on the rear designed to carry backpacks.

Selected data for last year’s operations are as follows:

Units in beginning inventory ...........0

Units produced ................20,000

Units sold ..................18,000

Units in ending inventory .............2,000

Variable costs per unit:

Direct materials ...............$ 40

Direct labor ..................20

Variable manufacturing overhead ......... 5

Variable selling and administrative ........ 2

Fixed costs:

Fixed manufacturing overhead ....... $250,000

Fixed S&A ................ $100,000

Required

A. What is the cost per bicycle if the company uses absorption costing?

B. What is the cost per bicycle if the company uses variable costing?