Variable Cost per Unit
Direct materials $8.25
Direct labor $2.70
Variable manufacturing overhead $6.33
Variable selling and administrative expenses $4.29
Fixed Costs per Year
Fixed manufacturing overhead $261,392
Fixed selling and administrative expenses $264,110In this case, would it be better to use the variable or absorption costing method, and why?
What are the benefits of the two methods?
Which method would lead to the best decision when a competitor is submitting a lower bid for your product?
