Variable and absorption costing) Defeet Remedy manufactures athletes’ foot powder. Data pertaining to the company’s 2007 operations follow:

Fixed manufacturing overhead is assigned to units of production based on a predetermined rate using an expected production capacity of 100,000 units per year.

a. What is budgeted annual fixed manufacturing overhead?

b. If budgeted fixed overhead equals actual fixed overhead, what is under¬ applied or overapplied overhead in 2007 under absorption costing? Un¬ der variable costing?
C. What is the product cost per unit under absorption costing? Under vari¬ able costing?

d. How much total expense is charged against revenues in 2007 under ab¬ sorption costing? Under variable costing?

e. Is pre-tax income higher under absorption or variable costing? By what amount?LO1.

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Production for the year Sales for the year (sales price per unit, $3) Beginning 2007 inventory Costs to Produce 1 Unit Direct material 90,000 units 97,500 units 17,500 units Direct labor Variable overhead Fixed overhead $1.80 1.00 0.15 0.32 Selling and Administrative Costs Variable (per unit sold) Fixed (per year) $0.28 $75,000