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Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.
Variable Cost per Unit
Direct $7.50   materials
Direct labor $2.45
Variable $5.75   manufacturing overhead
Variable $3.90   selling and administrative expenses
Fixed Costs per Year
Fixed manufacturing overhead $234,650
Fixed selling and administrative expenses $240,100

• Polk Company sells the fishing lures for $25. During 2012, the company sold 80,000 lures and produced 95,000 lures.
• Instructions
(a) Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012.
(b) Prepare a variable costing income statement for 2012.
(c) Assuming the company uses absorption costing, calculate Polk’s manufacturing cost per unit for 2012.
(d) Prepare an absorption costing income statement for 2012. Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50.)

(a) Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012.
Prepare a variable costing income statement for 2012.
Assuming the company uses absorption costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50.)

Direct Materials
Direct labour
Variable manufacturing overhead
Fixed manufacturing overhead
Manufacturing cost per unit $

Prepare an absorption costing income statement for 2012.