Absorption Costing Versus Variable Costing.Technic Company produces portable CD players. The company has no finished goods inventory at the beginning of year 1. The following information pertains to Technic Company.

Annual production 50,000 units Sales price $40 per unit Variable production cost per unit Direct materials $10 Direct labor 3 $25 per unit Manufacturing overhead 12 Fixed production costs $150,000 each year; $3 per unit at 50,000 units of production Variable selling and administrative cost $1 per unit Fixed selling and administrative cost $100,000 each year