PROBLEM 5-15 Comprehensive Problem with Labor Fixed [LO1, LO2, L03, LO4] Far North Telecom, Ltd., of Ontario, has organized a new division to manufacture and sell specialty cellular telephones. The division's monthly costs are shown below: Variable cocts per unit Direct materials Variable manufacturing overhead $48 $2 $360,000 Fixed manufacturing overhead costs (total) Selling and administrative costs: Variable Fixed (total) 12% of talec 470,000 Far North Telecom regards all of its workers as full-time employees and the company has a long- standing no layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labor costs in its fixed manufacturing overhead. The cellular phones sell for S150 each. During September, the first month of operations, the following activity was recorded Units produced Units sold 12,000 10,000 Required: I. Compute the unit product cost under: a. Absorption costing b. Variable costing Prepare an absorption costing income statement for September. Prepare a contribution format income statement for September using variable costing. Assume that th ber of top management, would you prefer to rely on the statement in (2) above or in (3) above when meeting with a group of prospective investors? 2. 3. 4. e company must obtain additional financing in order to continue operations. As a mem- 5. Reconcile the absorption costing and variable costing net operating incomes in (2) and (3) above