Problem 1. Big Firm has developed the following cost functions for each cost classification:

Manufacturing costs = $6.20 per unit + $100,000 per month

Selling and Administrative costs = $1.50 per unit + $4,500 per month

During the month of February, the firm produced 5,000 units and sold 4,500.

(a) For the month of February, what is the unit cost under variable costing?

(b) For the month of February, what is the unit cost under absorption costing?