Ivy, Inc., produces a single product that sells for $60 per unit. There were no inventories of work in process or finished goods. Costs for the year were as follows: Variable costs: Direct materials $4 per kg.

Direct labor $4 per hour

Manufacturing overhead $5 per unit

Selling expenses $3 per unit Fixed costs: Manufacturing overhead $36,000 Selling and administrative $15,000 Each unit produced consumes 2 kg of direct materials and uses 3 direct labor hours. During the year, 4,000 units were produced and 3,500 units were sold. There were no work-in-process inventories at the end of the year. REQUIRED 1. Determine the unit cost of production under (i) Variable costing. (2 marks)

(ii) Absorption costing. (3 marks 2. (i) Calculate the finished goods in units. (2 marks)

(ii) Determine the finished goods inventory cost at the year-end using absorption costing. (1 mark)

(iii) Determine the finished goods inventory cost at the year-end using variable costing. (1 mark) 3. Prepare an income statement to determine the operating profit under variable costing (8 marks) 4. Prepare an income statement to determine the operating profit under absorption costing