9-27 Absorption and variable costing. The textile company Asten consists of two departments, the ving department and the sales department. The normal capacity utilization of the weaving department machine hours, and the fixed costs are $1,200,000 per year. For the sales department, the 500,00 meters a year with $500,000 fixed wea is 100,000 following numbers are calculated: normal capacity utilization of annual costs. Asten produces and sells two products: Deco and Lustra. The following basic information is given Deco Lustra Raw material Other variable costs of weaving dept Number of machine hours per meter, 2kg at S5-$10 S8 3kg at $5 = $15 $10 Weaving dept Variable costs sales dept per meter 1/5 S0.60 1/5 S0.60 The two products can be made on the same weaving machines, but not at the same time. 1. Calculate the manufacturing costs and the total costs per meter for both Deco and Lustra. Actual results for 2014: Re Production: 200,000 meters of Deco and 310,000 meters of Lustra Sales: 190,000 meters of Deco and 300,000 meters of Lustra Sales price per meter: Deco $23, Lustra $30.60 Fixed costs: weaving department, $1,200,000; sales department, $500,000 There are no price and quantity variances on variable costs. 2. Calculate the variable costing profit 3. Calculate the absorption costing profit. 4. Explain the difference between 2 and 3