Problem 3 (20 points) BeanBag Company sells its Combole Set for $20 each and uses standard costing. The budgeted production level used to calculate the fixed manufacturing cost per unit is 10,000 units. Actual production was 8,000 units, and 8,300 units were sold. Assume a beginning inventory of 1,800 units and assume that the unit product cost for beginning inventory is the same as the current period unit product cost. Also, assume no price, efficiency, or spending variances. Any production volume variance is written off to cost of goods sold in the period it is incurred. Unit manufacturing costs are: Direct materials $3.50 Direct manufacturing labor $4.00 Variable MOH costs $2.50 Total fixed MOH costs (budgeted and actual) $12,000 per year Marketing expenses - variable $5.00 per unit Marketing expenses - fixed $14,000 per year Required: Calculate the unit product cost under 1) absorption costing and 2) variable costing (4 points) Calculate the production volume variance under absorption costing, if any (4 points) Prepare an income statement using absorption costing. Include a schedule for cost of goods sold. (8 points) How much better (or worse) off would you be if operating income is reported under variable costing? Show your work and explain your answer. (4 points) a. b. c. d