An industry leader in store fixtures is Orton Company, which designs and manufactures metal, wood, and wire display systems for retail stores worldwide. Orton receives about $6 billion of revenue each year from designing, manufacturing, and installing store fixtures in retail stores. Accounting for fixed manufacturing overhead is a challenge for the company. Suppose a manufacturing division of the company has the following budgeted costs for production of 820,000 shelving units in 2012 (Click the icon to view the budgeted data.) During 2012, this division of Orton produced 880,000 of the shelving units and sold 855,000 of them for $425 million. Assume that Orton does not allocate selling or administrative costs to the individual products. Read the requirements. Requirement 1. Compute the following budgeted unit costs for 2012. )x x=)= variance = Requirement 3. Compute the 2012 profit from the production and sales of the shelving using absorption costing. Ignore selling and administrative costs. Requirement 4. Compute the 2012 profit from the production and sales of the shelving using variable costing. Ignore selling and administrative costs. Revenue Read the Requirement 4. Compute the 2012 profit from the production and sales of the shelving using variable costing. Ignore selling and administrative costs. Requirement 5. Which measure of profit, absorption-costing profit or variable-costing profit, is a better measure of performance during 2012? Explain. is inherently better. The is a better measure of the effect of sales on profit. It is not affected by production volumes. The both sales and production volumes. Because production volume exceeded sales volume, the profit is higher under From an incentive point of view, the las the advantage of not being affected by production decisions. Under a manager can increase profits merely by producing more units, even if they are not sold. costs for production of 820,000 shelving units in 2012 : the icon to view the budgeted data.) 12, this division of Orton produce requirements. nent 4. Combute the 2012 profit ement 5. Which measure of profit, is inherently be that Orton does not allocate selling or admi and administrative costs. ce during 2012? Explain. fit. It is not affected by production volumes. The 1. Compute the following budgeted unit costs for 2012 : 2. Compute the production-volume variance for 2012 . Be sure to label it favorable or unfavorable. 3. Compute the 2012 profit from the production and sales of the shelving using absorption costing. Ignore selling and administrative costs. 4. Compute the 2012 profit from the production and sales of the shelving using variable costing. Ignore selling and administrative costs. 5. Which measure of profit, absorption-costing profit or variable-costing profit, is a better measure of performance during 2012? Explain