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.

Instructions
(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.