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Requirements

Calculate the inventoriable cost per unit using each level of capacity to

compute fixed manufacturing cost per unit.

Suppose ELF actually produces $300,000$ bulbs. Calculate

the production$-$volume variance using each level of capacity to compute the

fixed manufacturing overhead allocation rate.

Assume ELF has no beginning inventory. If this year's actual sales are

$225,000$ bulbs $($and production is $300,000$ bulbs$),$ calculate operating income

for ELF using each type of capacity to compute fixed manufacturing cost per

unit.

Earth Light First $($ELF$),$ a producer of energy$-$efficient light bulbs, expects that demand will increase markedly over the next decade. Due to the high fixed costs

involved in the business, ELF has decided to evaluate its financial performance using absorption costing income. The production$-$volume variance is written off to cost

of goods sold. The variable cost of production is $$2\mathrm{.}80$ per bulb. Fixed manufacturing costs are $$1,170,000$ per year. Variable and fixed selling and administrative

expenses are $$0\mathrm{.}20$ per bulb sold and $$200,000,$ respectively. Because its light bulbs are currently popular with environmentally conscious customers, ELF can sell

the bulbs for $$9\mathrm{.}60$ each. ELF is deciding among various concepts of capacity for calculating the cost of each unit produced. Its choices are as follows:

$($Click the icon to view the capacity information.$)$

Read the requirements.

Requirement $1.$ Calculate the inventoriable cost per unit using each level of capacity to compute fixed manufacturing cost per unit.

Begin by determining the formula to calculate the inventoriable cost per unit. $($Abbreviations used: mfg $=$ manufacturing, admin. $=$ administration.$)$

Fixed mfg overhead rate

Variable production cost

$=$ Inventoriable cost per unit

Data table