TopBass Inc. manufactures fishing equipment. During 2022, total costs associated with manufacturing 30,000 fly-cast fishing rods (a new product introduced this year) were as follows:

Required:

a. Calculate the cost per fishing rod under both variable costing and absorption costing.
b. If 600 of these fishing rods were in finished goods inventory at the end of 2022, by how much and in what direction (higher or lower) would 2022 operating income be different under variable costing than under absorption costing?
c. Express the fishing rod cost in a cost formula. What does this formula suggest the total cost of making an additional 400 fishing rods would be?

Transcribed Image Text:

Raw materials. . . . Direct labor.. Variable manufacturing overhead. Fixed manufacturing overhead . . . $124,200 33,000 22,500 36,000