TroutPro Co. manufactures fishing equipment. During 2016 total costs associated with manufacturing 15000 fly-cast fishing rods (a new product introduced this year) were as follows:

Raw materials $62100

Direct labor 16500

Variable manufacturing overhead 11250

Fixed manufacturing overhead 18000

Required:

a. Calculate the cost per fishing rod under both variable costing and absorption costing.

b. If 300 of these fishing rods were in finished goods inventory at the end of 2016, by how much and in what direction (higher or lower) would 2016 operating income he different under variable costing than under absorption costing?

c. Express the fishing rod cost in a cost formula. What does this formula suggest the total cost of making an additional 200 fishing rods would be?