Home Base, Inc Assume That Productions Costs Have Remained the Same Since the

Home Base, Inc. reports the following production cost information:
$$\begin{array} { | l | l | } \hline \text { Beginning inventory } & 10,000 \text { units } \\\hline \text { Units produced } & 97,000 \text { units } \\\hline \text { Units sold } & 92,000 \text { units } \\\hline \text { Direct labor } & \$ 17 \text { per unit } \\\hline \text { Direct materials } & \$ 34 \text { per unit } \\\hline \text { Variable overhead } & \$ 26 \text { per unit } \\\hline \text { Fixed overhead } & \$ 1,940,000 \text { in total } \\\hline \text { Operating costs } & \$ 2,000,000 \text { in total } \\\hline\end{array}$$ Assume that productions costs have remained the same since the previous period and all units are sold for $137.00 per unit.
a. Compute production cost per unit under variable costing.
b. Compute production cost per unit under absorption costing.
c. Determine net income using variable costing.
d. Determine net income using absorption costing.

Correct Answer:

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a. $17 DL + $34 DM + $26 VOH = $77 per u...

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