Munn Bicycle Company manufactures bicycles specifically for college campuses They
Munn Bicycle Company manufactures bicycles specifically for college campuses. They sell for $100 and are very sturdy, with built-in saddlebags on the rear designed to carry backpacks.
Selected data for last year’s operations are as follows:
Units in beginning inventory ........... 0
Units produced ................20,000
Units sold ..................18,000
Units in ending inventory .............2,000
Variable costs per unit:
Direct materials ...............$ 40
Direct labor ..................20
Variable manufacturing overhead ......... 5
Variable selling and administrative ........ 2
Fixed costs:
Fixed manufacturing overhead ....... $250,000
Fixed S&A ................ $100,000
Required
A. What is the cost per bicycle if the company uses absorption costing?
B. What is the cost per bicycle if the company uses variable costing?

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