Question - Abigail Corporation produces widgets. In 2008, its first year of operations, the company produced 100,000 widgets and sold 90,000 widgets. The selling price is $70 per widget.
The production costs are
Direct Materials $10 per widget
Direct Labor $5 per widget
Variable Manufacturing Overhead $12 per widget
Fixed Manufacturing Overhead $600,000 in total
The company also had fixed selling costs of $100,000 and fixed administration costs of $150,000
Answer the following questions:
1. Under the full costing method, are fixed selling costs a product or period cost?
2. What is the product cost of one widget using the full costing method?
3. What is the product cost of one widget using the variable costing method?
4. What is the cost of goods sold using the full costing method?