Felde Company builds custom fishing lures for sporting goods stores. In its firs

Question

Felde Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2014, the company incurred the following costs.

Variable Cost per Unit

Direct materials $7.95

Direct labor $2.60

Variable manufacturing overhead $6.10

Variable selling and administrative expenses $4.13

Fixed Costs per Year

Fixed manufacturing overhead $250,996

Fixed selling and administrative expenses $254,506

Felde Company sells the fishing lures for $26.50. During 2014, the company sold 80,900 lures and produced 95,800 lures.

Instructions

(a) Assuming the company uses variable costing, calculate Klumms manufacturing cost per unit for 2011.

(b) Prepare a variable costing income statement for 2011.

(c) Assuming the company uses absorption costing, calculate Klumms manufacturing cost per unit for 2011.

(d) Prepare an absorption costing income statement for 2011.

Explanation / Answer

Felde Company builds custom fishing lures for sporting goods stores. In its firs

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