Kates Kale Chips produces a healthy snack made primarily of kale. Each bag of the product sells for $5. The company computes the manufacturing overhead rate on a quarterly basis based upon the planned number of units to be produced that quarter. The following data are from Kates Kale Chipss projections for the upcoming quarter:

Required:

1.

Compute the projected product cost per bag produced under absorption costing.

2.	Compute the projected product cost per bag under variable costing.

Projections 20,000 bags Sales Production Variable manufacturing cost per bag Sales and distribution costs per bag Total fixed manufacturing overhead Fixed administrative overhead 22,000 bags $ 2.00 $ 0.15 $33,000 $18,000