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    Variable versus Absorption Costing

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    Buddy's Baseball Bat Manufacturing produced 80,000 baseball bats in 2005.

    The company sold
    60,000 bats at a selling price of $50 a bat. The company had the following costs related to the
    production of 80,000 bats.

    Direct Materials $800,000
    Direct Labor $400,000
    Variable Overhead $250,000
    Fixed Overhead $200,000

    Variable Selling/Admin $250,000
    Fixed Selling/Admin $200,000

    1) Calculate the unit COGS under both absorption and variable costing.

    2) Prepare an Income Statement under both absorption and variable costing.

    If you could show me how the calculations are done, so I may learn this. Thank you so much!

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    Solution Summary

    The expert compares variables versus absorption costings.