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

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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?

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