Problem - Lenny Industries makes extruded aluminum that it sells to contractors.  Last year, the company had no beginning inventory; they produced 100,000 units, and sold 70,000 of those units. The selling price per each unit is $50.

The variable costs per unit were:

Direct Materials ...................................................$10 per unit

Direct Labor................................................................$4 per unit

Variable Man. Overhead.............................................$4 per unit

Variable selling and administrative expenses.............$6 per unit

Fixed costs per year:

Fixed manufacturing Overhead ...................$300,000

Fixed Selling and Administrative expenses.. $900,000

(a) What is the cost of one unit of product under variable costing?

(b) What is the cost of one unit of product under absorption costing?

(c) Prepare the Income Statement using ABSORPTION Costing.