(Income statements, variance) Alabama Electronic makes a heating element that is used in several kitchen appliances. The company produces and sells approxi¬ mately 800,000 elements per year. The projected unit cost data for 1998 follows; the company uses standard full absorption costing and writes off all variances to Cost of Goods Sold.

The fixed overhead application rate is $.14 per unit.

a. Calculate the per-unit inventory cost for variable costing.

b. Calculate the per-unit inventory cost for absorption costing.

c. The projected income before tax from variable costing is $230,000 at pro¬ duction and sales of 800,000 units and 790,000 units, respectively. Projected beginning and ending finished goods inventories are 20,000 and 30,000 units, respectively. Calculate the projected income before tax using absorption costing.LO1

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VARIABLE FIXED Direct material $1.50 -0- Direct labor 1.20 -0- Variable overhead .40 -0- Fixed overhead $110,000 Selling and administrative 4.00 145,000