Variety Appliances produces two lines of refrigerators. Typically, the company sells (and makes) an equal number of each product line. Both product lines are manufactured in the same facility using the same equipment and staff; the plant changes from making one product line to the other as the production plan requires. Both product lines take about the same amount of time to produce. The main difference is in the quality of materials used in the products.
In 2012, consumers shifted toward the higher-end products in home furnishings, which resulted in the following operating results for Variety Appliances:

Fixed production costs, comprising factory depreciation and production manager salary, totaled $5 million. Variety Appliances uses the first-in, first-out cost flow assumption.
Required:
a. Consider the two product lines separately. Determine the cost of goods sold for each line and for Variety Appliances as a whole.
b. Consider the two product lines as a single manufacturing process. Determine the cost of goods sold for Variety Appliances as a whole.
c. Discuss the difference between (a) and (b). Which approach is better?

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Economy line Deluxe line Number of units Normal volume of production Actual volume of production Opening inventory Closing inventory Actnal production costs Raw materials ($100 or S200 per unit) Production wages (S150 per unit) Variable production overhead (S50 per unit) Total variable production costs (S300 or $400 per unit) Fixed production overhead Opening inventory (S425 or $525 per unit) 20,000 16,000 4,000 5,000 20,000 24,000 4,000 3,000 S1,600,000 $4,800,000 2.400,000 000 800,000 1,200,000 9,600,000 4,800,000 S1,700,000 2,100,000