Cedar Products is a company that produces wooden novelties. The controller has been asked by the president to review the company's costing methods. Currently, the company uses absorption costing for internal as well as external purposes, but they are considering using variable costing for internal reporting and decision making. Information related to a recent production period is as follows:

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A. Calculate the unit product cost using absorption costing.
B. Calculate the unit product cost using variable costing.
C. Cedar's president does not see any need to spend the extra time and money to develop a second costing system. The controller is in favor of doing so. What might the controller tell the president when trying to convince him to agree to use variable costing?

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Units produced Units sold Direct labor Direct materials Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative Fixed selling and administrative 6.000 4,000 $6 per unit $5 per unit $4 per unit $36,000 $1.50 per unit sold $40,000