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 materials |
|
$7.80 |
| Direct labor |
|
$2.55 |
| Variable manufacturing overhead |
|
$5.98 |
| Variable selling and administrative expenses |
|
$4.06 |
| |
|
|
| Fixed Costs per Year |
|
|
| Fixed manufacturing overhead |
|
$246,977 |
| Fixed selling and administrative expenses |
|
$249,704 |
Polk Company sells the fishing lures for $26.00. During 2012, the company sold 81,300 lures and produced 96,100 lures.