1. (2pts) Bubbles Inc., which produces a single product, has provided the following data for its most recent month of operation:

Number of units produced		7,000
Variable costs per unit:
Direct materials	$	37
Direct labor	$	43
Variable manufacturing overhead	$	5
Variable selling and administrative expenses	$	1
Fixed costs:
Fixed manufacturing overhead	$	84,000
Fixed selling and administrative expenses	$	119,000

The company had no beginning or ending inventories.

a. Compute the unit product cost under absorption costing. (1pt)

b. Compute the unit product cost under variable costing. (1pt)

2. (3pts) Avalanche Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$	120
Units in beginning inventory		0
Units produced		8,900
Units sold		8,400
Units in ending inventory		500
Variable costs per unit:
Direct materials	$	38
Direct labor	$	36
Variable manufacturing overhead	$	6
Variable selling and administrative expense	$	9
Fixed costs:
Fixed manufacturing overhead	$	151,300
Fixed selling and administrative expense	$	109,200

a. Prepare a contribution format income statement for the month using variable costing. (1.5pts)

b. Prepare an income statement for the month using absorption costing. (1.5pts)