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University of Phoenix ACC 561 Polk Company




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???$7.50;Direct labor???$2.45;Variable manufacturing overhead???$5.75;Variable selling and administrative expenses???$3.90;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.;(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.;#1 In this case, would it be better to use the variable or absorption costing method, and why?;#2What 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?


Paper#80372 | Written in 18-Jul-2015

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