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(15 pts) 4. Herro Inc. produces an oak rocking chair that is designed to ease back problems. The chairs sell for $300 each. The results
(15 pts) 4. Herro Inc. produces an oak rocking chair that is designed to ease back problems. The chairs sell for $300 each. The results of last year's operations are as follows: Units in beginning inventory. 0 Units produced during the year. 30,000 Units sold during the year. 25,000 Units left in ending inventory. 5,000 Variable manufacturing costs per unit. Direct materials $100 Direct labor 25 Variable manufacturing overhead 35 Variable selling and administrative Total variable cost per unit $180 Fixed costs: Fixed manufacturing overhead $810,000 Fixed selling and administration 900,000 Total fixed costs $1,710,000 20 Required: a) Determine the unit product cost under absorption costing, variable costing, and throughput costing. b) Prepare an income statement using variable costing. c) Prepare an income statement using absorption costing. d) Explain the difference in operating income for the two costing systems
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