A company manufactures a unique device that is used to boost Wi-Fi signals. The following data relates to the first month of operation:

Beginning inventory	0
Units produced	40,000
Units sold	35,000
Selling price per unit	$120
Selling and administrative expenses:
Variable per unit	$4
Fixed (total for the month)	$1,120,000
Manufacturing costs:
Direct materials cost per unit	$30
Direct labor cost per unit	$14
Variable manufacturing overhead cost per unit	$4
Fixed manufacturing overhead cost	$1,280,000

Management is anxious to see the profitability of newly designed unique booster.

Required:

Calculate the unit product cost under variable costing system and absorption costing system.

Prepare an income statement under two costing systems.

Explain the difference in net operating income under both systems. What does this difference tell the management about the profitability of the booster?

See next page for submission requirements

Submission Requirements:

Answer each part of the exercise in detail with conclusions and results.

Submit your calculations in Microsoft Excel showing step-by-step calculations.

Submit your responses in the same Microsoft Excel document with your step-by-step calculations