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# The Polk Company builds custom fishing lures for sporting goods

### Resolved Question:

The Polk Company builds custom fishing lures for sporting goods stores. In its 1st year of operations, 2012, the company incurred the following costs:
Variable Costs per Unit:
Direct Materials \$7.50
Dirct Labor \$2.45
Variable Selling & Admn Expenses \$3.90
Fixed Costs Per Year
Fixed Selling & Admn Expenses \$240,100

Polk Company sells the fishing lures for \$25. During 2012, the company sold 80,000 lures and produced 95,000 lures.
a)Assuming the company uses variable costing, calculate Polk's manufacturing cost per unit for 2012
b)Assuming the company uses absorption costing, calculate Polk's manufacturing cost per unit for 2012
In 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?

Thanks!
Submitted: 1 year ago.
Category: Single Problem
Expert:  linda_us replied 1 year ago.
Thanks for requesting me.

Customer: replied 1 year ago.

Expert:  linda_us replied 1 year ago.
I am working on it and will post it in an hour.
Customer: replied 1 year ago.

Thank you so much, I will rate again when completed!

Expert:  linda_us replied 1 year ago.
linda_us, Master's Degree
Category: Single Problem
Satisfied Customers: 7137
Experience: Business Analyst and Solution Consultant with over 9 years of experience.

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