a

Exercise 5-21

Absorption Costing vs. Variable Costing

Munn Bicycle Company manufactures bicycles specifically for college campuses. The bicycles sell for $100 and are very sturdy, with built-in saddlebags on the rear designed to carry backpacks. Selected data for last year's operations are as follows:

Required:

Round your answers to the nearest cent, if necessary.

A. What is the product cost per bicycle if the company uses absorption costing? $

B. What is the product cost per bicycle if the company uses variable costing? $