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Absorption and Variable Costing with Over- and Underapplied Overhead Flaherty, Inc., has just...

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Accounting

Absorption and Variable Costing with Over- and Underapplied Overhead
Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows:
Manufacturing costs (per unit):
Direct materials (2 lbs. @ 1.30) $2.60
Direct labor (0.4 hr. @ 15.50)6.20
Variable overhead (0.4 hr. @ 5.00)2.00
Fixed overhead (0.4 hr. @ 7.00)2.80
Total $13.60
Selling and administrative costs:
Variable $1.90 per unit
Fixed $220,500
During the year, the company had the following activity:
Units produced 26,500
Units sold 23,850
Unit selling price $35
Direct labor hours worked 10,600
Actual fixed overhead was $13,600 less than budgeted fixed overhead. Budgeted variable overhead was $4,300 less than the actual variable overhead. The company used an expected actual activity level of 10,600 direct labor hours to compute the predetermined overhead rates. Any overhead variances are closed to Cost of Goods Sold.
Required:
Question Content Area
1. Compute the unit cost using (a) absorption costing and (b) variable costing.
Unit Cost
Absorption costing $fill in the blank
Variable costing $fill in the blank

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