Oxygen,Inc Assume That the Production Costs and Sales Prices Were the |

Essay

Oxygen,Inc.reports the following information:
$$\begin{array} { | l | r | r|} \hline \text { Units produced } & 2,500& \text { units } \\\hline \text { Units sold } & 2,000& \text { units } \\\hline \text { Sales price } & \$ 200& \text { per unit } \\\hline \text { Direct materials } & \$ 40 &\text { per unit } \\\hline \text { Direct labor } & \$ 25 &\text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 20& \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 90,000 &\text { per year } \\\hline \text { Variable selling and administrative costs } & \$ 15& \text { per unit } \\\hline \text { Fixed selling and administrative costs } & \$ 75,000 &\text { per year } \\\hline\end{array}$$ Assume that the production costs and sales prices were the same in the previous year.Assume no beginning inventories.
Requirements:
a)Calculate unit product cost using absorption costing and variable costing.
b)Calculate the operating income using absorption costing and variable costing.