Problem:
Buddy's Baseball Bat Manufacturing produced 80,000 baseball bats in 2005.
The company sold
60,000 bats at a selling price of $50 a bat. The company had the following costs related to the
production of 80,000 bats.
Direct Materials $800,000
Direct Labor $400,000
Variable Overhead $250,000
Fixed Overhead $200,000
Variable Selling/Admin $250,000
Fixed Selling/Admin $200,000
1) Calculate the unit COGS under both absorption and variable costing.
2) Prepare an Income Statement under both absorption and variable costing.