CompuDesk, Inc., makes an oak desk specially designed for personal computers. The desk sells for $200. Data for last years operations follow:

Units in beginning inventory

0

Units produced

10,000

Units sold

9,000

Units in ending inventory

1,000

Variable costs per unit:

Direct materials

$ 60

Direct labor

30

Variable manufacturing overhead

10

Variable selling and administrative

20

Total variable cost per unit

$ 120

Fixed costs:

Fixed manufacturing overhead

$

300,000

Fixed selling and administrative

450,000

Total fixed costs

$

750,000

1.

Assume that the company uses absorption costing. Compute the unit product cost for one computer desk.

2.	Assume that the company uses absorption costing. Prepare an income statement.