Accounting: What the Numbers Mean 11th Edition by Wayne McManus,Daniel Viele,David Marshall

Exercise 30

Variable versus absorption costing Wool Creations, Inc., manufactures wool sweaters. Costs incurred in making 9,000 sweaters in October included $22,500 of fixed manufacturing overhead. The total absorption cost per sweater was $11.60.
Required:
a. Calculate the variable cost per sweater.
b. The ending inventory of sweaters was 1,600 units lower at the end of the month than at the beginning of the month. By how much and in what direction (higher or lower) would cost of goods sold for the month of October be different under variable costing than under absorption costing?
c. Express the sweater cost in a cost formula.