Question: Compare variable costing and absorption costing methods for LMN Corporation using the following data: Cost Component Variable Cost ($) Fixed Cost ($) Direct Materials $10,000

  • Compare variable costing and absorption costing methods for LMN Corporation using the following data:

    Cost ComponentVariable Cost ($)Fixed Cost ($)
    Direct Materials$10,000$5,000
    Direct Labor$7,000$3,000
    Manufacturing Overhead$5,000$2,000

    Requirements:

    • Calculate the total cost per unit under variable and absorption costing.
    • Present the analysis in a detailed table format.
    • Discuss the differences between variable and absorption costing and their impact on financial statements.

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