Fort Worth Company is a printer and binder of specialized booklets and pamphlets. Last year, the company's sales manager estimated sales to be 10,000 booklets and pamphlets combined. The sales manager also estimated that the items would retail for approximately $10 each. Various production costs, including direct and indirect material, direct and indirect labor, and variable overhead, were estimated to total $50,000, while fixed costs were estimated to be $20,000.
During the year, Fort Worth's unit sales equaled its production of 12,000 units. Because of changing market conditions-specifically, competition-the average selling price fell to just $9.50 per unit. There were increased variable costs as well that resulted in average per-unit variable costs of $6. At the end of the year, the company's controller accumulated fixed costs and found them to be $21,000.