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Baxtell Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations: Variable costs per unit: Manufacturing:

Baxtell Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations:

Variable costs per unit:
Manufacturing:
Direct materials $ 28
Direct labour 16
Variable manufacturing overhead 6
Variable selling and administrative 5
Fixed costs per year:
Fixed manufacturing overhead 330,000
Fixed selling and administrative expense 201,600

During the year, the company produced 27,500 units and sold 22,400 units. The selling price of the companys product is $82 per unit.

Required:
1.

Assume that the company uses absorption costing.

b.

Prepare an income statement for the year.

2.

Assume that the company uses variable costing.

a.

Compute the unit product cost.

b.

Prepare an income statement for the year.

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