Matt’s Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2011, 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
Matt’s Company sells the fishing lures for $25. During 2011, the company sold 80,000 lures and produced 95,000 lures.

Instructions
(a) Assuming the company uses variable costing calculate Matt’s manufacturing cost per unit for 2011.
(b) Prepare a variable costing income statement for 2011.
(c) Assuming the company uses absorption costing calculate Matt’s manufacturing cost per unit for 2011.
(d) Prepare an absorption costing income statement for 2011.