e. Calculate the cost per unit sold under absorption costing. 103 Question 4 ch.8 Hermione Corporation is a newly formed manufacturing company expected to begin operations on January 2, 201 company that went out of business on December 31,2010. These units were purchased at a cost of $5 per unit. The estimated production and non-manufacturing costs are as follows 1. The company has obtained 4,000 units of the product it intends to manufacture from a Variable costs per unit Manufacturing Selling and administrative $7.50 $1.00 Fixed costs Manufacturing Selling and administrative $80,000 $55,000 Sales for the upcoming year (2011) are forecasted to total 96,000 units at a price of $12 per unit. The company plans to produce 100,000 units during 2011. Plant capacity is 100,000 units. Required a. Prepare, in good form, an absorption costing income statement and a variable costing income statement for the year ended December 31, 2011, assuming 100,000 units are produced and 96,000 units are sold. The company uses the FIFO method of inventory management. (Note that the units in beginning inventory are purchased and not manufactured.) b. Prepare a reconciliation between the net incomes obtained from the two approaches. CG4-Canada 2011 Page 4 of 6