Inman, Inc., is a manufacturer of a single product and is starting to develop a budget for the coming year. Because cost of goods manufactured is the biggest item, Inmans senior management is reviewing how costs are calculated. In addition, senior management wants to develop a budgeting system that motivates managers and other workers to work toward the corporate goals. Inman has incurred the following costs to make 100,000 units during the month of September. Materials $400,000 Direct labor 100,000 Variable manufacturing overhead 20,000 Variable selling and administrative costs 80,000 Fixed manufacturing overhead 200,000 Fixed selling and administrative costs 300,000 Inman, Inc.s September 1 inventory consisted of 10,000 units valued at $72,000 using absorption costing. Total fixed costs and variable costs per unit have not changed during the past few months. In September, Inman sold 106,000 units at $12 per unit.

Using absorption costing, calculate the following: Inmans September manufacturing cost per unit

Inmans September 30 inventory value

Inmans September net income

Using variable costing, calculate the following:

Inmans September manufacturing cost per unit

Inmans September 30 inventory value

Inmans September net income

Identify and explain one reason why the income calculated in the previous two questions might differ.

Identify and discuss one advantage of using each of the following:

Absorption costing

Variable costing

Identify one strength and one weakness each of authoritative budgeting and participative budgeting.

Which of these budgeting methods will work best for Inman, Inc.? Explain your answer.

Identify and explain one method the top managers can take to restrict the Production Manager from taking advantage of budgetary slack.