Bob's Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs:

In E8-19

Variable cost per unit

Direct materials ......................................................... $ 6.50

Direct labour ............................................................2.75

Variable manufacturing overhead ....................................5.75

Variable selling and administrative expenses .......................3.90

Fixed costs for year

Fixed manufacturing overhead .................................... $285,000

Fixed selling and administrative expenses .........................240,100

Bob's 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 Bob's manufacturing cost per unit for 2012.

(b) Prepare a variable-costing income statement for 2012.