XYZ Co. uses normal job costing. The firm does not prorate over/under allocated MOH and uses first- in-first-out (FIFO) inventory flow. In 2021, they had the following costs: DM $10 per unit DL $11 per unit VMOH $6 per unit; $162,000 actually spent FMOH $93,000 actually spent (with absorption costing FMOH was allocated using a rate of $3 per unit) Variable selling costs $3 per unit sold Fixed administrative costs $210,000 At the beginning of 2021, XYZ had no work in process (WIP) but had 400 units in finished goods inventory. Each of these units had a cost of $25 using variable costing but a cost of $29 using absorption costing. During 2021, XYZ produced 30,000 units and sold 29,900 units (at a selling price of $120 each). There was no ending WIP. Which costing system (absorption or variable) is required by GAAP? Using variable costing calculate the COGS that would be reflected on XYZ's income statement and calculate the contribution margin that would be shown on the income statement.

XYZ Co. uses normal job costing. The firm does not prorate over/under allocated MOH and uses firstin-first-out (FIFO) inventory flow. In 2021, they had the following costs: DM $10 per unit DL \$11 per unit VMOH $6 per unit; $162,000 actually spent FMOH $93,000 actually spent (with absorption costing FMOH was allocated using a rate of $3 per unit) Variable selling costs $3 per unit sold Fixed administrative costs $210,000 At the beginning of 2021, XYZ had no work in process (WIP) but had 400 units in finished goods inventory. Each of these units had a cost of $25 using variable costing but a cost of $29 using absorption costing. During 2021, XYZ produced 30,000 units and sold 29,900 units (at a selling price of $120 each). There was no ending WIP. Which costing system (absorption or variable) is required by GAAP? Using variable costing calculate the COGS that would be reflected on XYZ's income statement and calculate the contribution margin that would be shown on the income statement