Complete Question Text:

Herb Garden manufactures garden planters for growing fresh herbs to use in cooking. Individuals as well as local restaurants purchase the planters. Recently, the company incurred the following costs:

Variable Cost per Planter Direct materials $8.50 Direct labor 2.40 Variable manufacturing overhead 1.50 Variable selling and administrative expenses 0.65 Fixed Cost per Month Fixed manufacturing overhead $12,125 Fixed selling and administrative expenses 8,640

Herb Garden charges $17 for each planter that it sells. During the first month of operation, it made 6,500 planters and sold 6,225.

Required: 1. Assuming Herb Garden uses variable costing, calculate the variable manufacturing cost per unit for last month. 2. Prepare a variable costing income statement for last month. 3. Assuming Herb Garden uses full absorption costing, calculate the full manufacturing cost per unit for last month. 4. Prepare a full absorption costing income statement. 5. Compare the two income statements and explain any differences.