Linus Company manufactures and distributes industrial air compressors. The following costs are available for the year ended December 31, 2014. The company has no beginning inventory. In 2014, 1,500 units were produced, but only 1,300 units were sold. The unit selling price was $4,500. Costs and expenses were as follows.

Variable costs per unit

Direct materials ................$ 1,000

Direct labor ...................... 1,500

Variable manufacturing overhead .............. 500

Variable selling and administrative expenses ...... 60

Annual fixed costs and expenses

Manufacturing overhead ...........................$1,400,000

Selling and administrative expenses ...................... 100,000

Instructions

(a) Compute the manufacturing cost of one unit of product using variable costing.

(b) Prepare a 2014 income statement for Linus Company using variable costing.