Variable and Absorption Costing Scott Manufacturing makes only one product with total unit manufacturing costs of $56, of which $38 is variable. No units were on hand at the beginning of 2015. During 2015 and 2016, the only product manufactured was sold for $87 per unit, and the cost structure did not change. Scott uses the first-in, first-out inventory method and has the following production and sales for 2015 and 2016 2015 Units Manufactured Units Sold 120,000 90,000 120,000 130,000 2016 a. Prepare gross profit computations for 2015 and 2016 using absorption costing. Do not use negative signs with your answers. Absorption Costing 2015 2016 Sales $ 7,830,000 $ 11,310,000 Cost of goods sold: Beginning inventory o 1,680,000 Production 6,720,000 6,720,000 Goods available 6,720,000 8,400,000 Less: Ending inventory 1,680,000 1,120,000 Cost of goods sold 5,040,000 ~ 7,280,000 Gross profit $ 2,790,000 $ 4,030,000 b. Prepare gross profit computations for 2015 and 2016 using variable costing. Do not use negative signs with your answers. Variable Costing 2015 2016 Sales $ 7,830,000 $ 11,310,000 Variable cost of goods sold: Beginning inventory 0 1,140,000 Production 672,000 X 6,720,000 x Goods available 6,720,000 * Less: Ending inventory 1,140,000 760,000 Variable cost of goods sold 5,580,000 x 710,000 x Less: Fixed manufacturing costs OX 0 x Gross profit $ 2,250,000 $ 4,210,000