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3. (5pts) Nothing But Gloves, Inc. is a baseball glove manufacturer that reports the following information from the current period for its product. PARTA: Sales

3. (5pts) Nothing But Gloves, Inc. is a baseball glove manufacturer that reports the following information from the current period for its product. PARTA: Sales price per unit $125.00 per unit Manufacturing costs incurred this period: DM $11.50 per unit DL $26.00 per unit Variable OH $2.75 per unit Fixed OH $144,000 Per period Non-Manufacturing (i.e. Selling and Administrative) costs incurred this period: Variable S&A Fixed S&A Units in finished goods inventory, beginning of the month Units produced this month Units sold this month 1) Calculate net income for the period using absorption costing (1pt). 2) Calculate net income for the period using variable costing (1pt). $1.90 per unit $91,375 Per period 0 Units 40,000 Units 35,000 Units PARTB: Suppose the firm decides to increase its production for the period to 75,000 units (assume the firm has enough excess capacity to produce the 75,000 units) but continues to sell only 35,000 units. 1) Calculate net income for the period company using absorption costing at this new 75,000 unit level of production (1pt). 2) Compare your answer in PARTB, 1) to your answer in PARTA, 1). By how much did net income change under absorption costing? (0.5pts) 3) Calculate net income for the period company using variable costing at this new 75,000 unit level of production (1pt). 4) Compare your answer in PARTB, 3) to your answer in PARTA, 2). By how much did net income change under variable costing? (0.5pts)

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