Polk Company _Variable costing



5. Polk Company builds custom fishing lures
for sporting goods stores. In its first year of operations, 2012, the company
incurred the following costs.

Cost per Unit

Direct materials —$8.10

Direct labor—–$2.65

Variable manufacturing overhead—-$6.21

Variable selling and administrative
expenses—– $4.21

Costs per Year

Fixed manufacturing overhead– $254,184

Fixed selling and administrative expenses—$259,308

Company sells the fishing lures for $27.00. During 2012, the company sold
81,000 lures and produced 95,200 lures.

Assuming the company uses variable costing, calculate Polk’s
manufacturing cost per unit for 2012. (Round answer to 2 decimal places,

Manufacturing cost per unit $16.96


In this case, would it be better to use the
variable or absorption costing method, and why=”msonormal”>

What are the benefits of the two methods?



Which method would lead to the best
decision when a competitor is submitting a lower bid for your product?



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