5. 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 —$8.10

Direct labor—–$2.65

Variable manufacturing overhead—-$6.21

Variable selling and administrative expenses—– $4.21

Fixed Costs per Year

Fixed manufacturing overhead– $254,184

Fixed selling and administrative expenses—$259,308

Polk Company sells the fishing lures for $27.00. During 2012, the company sold 81,000 lures and produced 95,200 lures.

Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50.)

Manufacturing cost per unit $16.96

<pclass= msonormal style= color: rgb(0, 0, 0); font-family: Verdana, arial, sans-serif; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px; >

<pclass= msonormal >

In this case, would it be better to use the variable or absorption costing method, and why

<pclass= msonormal ><pclass= msonormal >What are the benefits of the two methods?

<pclass= msonormal ><pclass= msonormal >

<pclass= msonormal ><pclass= msonormal >

Which method would lead to the best decision when a competitor is submitting a lower bid for your product?