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Absorption and Variable Costing Activity The Fun Factory has provided the following data for its two most recent years of operation: Selling price per unit

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Absorption and Variable Costing Activity The Fun Factory has provided the following data for its two most recent years of operation: Selling price per unit $96 Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative expenses: Variable selling and administrative expense per unit sold Fixed selling and administrative expense per year 480,000 68,000 Year 1 Units in beginning inventory Units produced during the year Units sold during the year Units in ending inventory 12,000 9,000 3,000 Year 2 3,000 15,000 15,000 3,000 Complete (a) through (a). Assume the company uses absorption costing. Compute the unit product cost in each year. Year 1 Year 2 (b). Assume the company uses absorption costing. Prepare an income statement for each year. Year 1 Year 2 C. Assume the company uses variable costing. Compute the unit product cost in each year. Year 1 Year 2 d. Assume the company uses variable costing. Prepare an income statement for each year. Year 1 Year 2 e. Prepare a report in good form to reconcile the variable costing and absorption costing net incomes. Year 1 Year 2 Year 1 Year 2

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