Data for 2015, its first year of operations (No beginning inventory):

Annual factory capacity (in units): 300,000

Variable manufacturing cost per unit: $10

Sales demand: 180,000

Units manufactured in 2015: 240,000

Fixed manufacturing overhead costs: $1,917,000

Fixed non-manufacturing costs: $145,000

Variable non-manufacturing costs per unit: $2

(this is a sales commission)

Sales price per unit: $ 25

The sales demand, per-unit sales price, per-unit variable manufacturing cost, per-unit sales commission, and total fixed non-manufacturing costs are all expected to remain unchanged in 2016 from 2015. Fixed manufacturing overhead costs are expected to increase by 10%.

1. Calculate 2015 income and projected 2016 income under Absorption Costing, under each of the following sets of assumptions and show your work:

a) Calculate 2015 income and projected 2016 income under Variable Costing, under FIFO, assuming the company manufactures enough units in 2016 to plan for 90,000 units in ending inventory at the end of the year.

b) The company accounts for inventory using FIFO, allocates fixed manufacturing overhead costs based on units produced, manufactures at capacity in 2016.

c) The company accounts for inventory using FIFO, allocates fixed manufacturing overhead costs based on units produced, manufactures enough units in 2016 to plan for 90,000 units in ending inventory at the end of the year.

d) The company accounts for inventory using LIFO, allocates fixed manufacturing overhead costs based on units produced, manufactures at capacity in 2016.

e) The company accounts for inventory using LIFO, allocates fixed manufacturing overhead costs based on units produced, manufactures enough units in 2016 to plan for 90,000 units in ending inventory at the end of the year.