write 350 words after completing exercise 19 17 wileyplus

Write a paper of no more than 350 words after completing Exercise 19-17 in WileyPLUS in which you respond to the following questions:

• 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?

 

Exercise 19-17

Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.

Variable Cost per Unit
Direct materials		$7.88
Direct labor		$2.57
Variable manufacturing overhead		$6.04
Variable selling and administrative expenses		$4.10
Fixed Costs per Year
Fixed manufacturing overhead		$246,568
Fixed selling and administrative expenses		$252,105

Polk Company sells the fishing lures for $26.25. During 2012, the company sold 80,600 lures and produced 95,200 lures.