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 $12 per unit

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. 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; only finished goods inventories.

REQUIRED

(show all workings)

1. Determine the unit cost of production under variable costing.

2. Determine the unit cost of production under absorption costing.

3. (i) Calculate the finished goods in units .

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

(iii) Determine the finished goods inventory cost at the year-end using variable costing.

4. Determine the operating profit under variable costing

5. Determine the operating profit under absorption costing