Kelley Industries makes high-performance swimwear for triathletes. Kelley's manufacturing costs for the production of 100,000 swimsuits were as follows:

Total Manufacturing Cost for 100,000 units:

Direct Materials: $1,800,000

Direct Labor: $375,000

Variable MOH: $250,000

Fixed MOH: $300,000

TOTAL COST: $2,725,000

 

Requirement 1. Calculate the product cost per unit using 1) absorption costing and 2) variable costing. 

Requirement 2. Begin by selecting the formula used to determine the change in operating income. Then enter the amounts and calculate the difference in operating income.

Answer rating: 100% (QA)

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