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ABC manufacturing company produces a single product and has provided the following data concerning its most recent month of operations: Total sales $215,000 Variable costs

ABC manufacturing company produces a single product and has provided the following data concerning its most recent month of operations:

Total sales

$215,000

Variable costs per unit

Direct materials

$25

Direct labour

30

Manufacturing overhead

5

Selling and administration

6

Fixed costs (total)

Manufacturing overhead

6,000

Selling and administration

8,000

Units in beginning inventory

0 units

Sales

1,400 units

Units in ending inventory

200 units

Required

a) Calculate the per unit cost under variable and absorption costing.

b) Prepare a statement of income for the month using absorption costing. Show all of your work.

c) Without calculations, would the income be higher or lower under variable costing? Explain why.

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