White Water Rafting Company manufactures kayaks, which sell for $545 each. The variable costs of production (per unit) are as follows:

Direct Material $ 185
Direct labor 100
Variable manufacturing overhead 90

Budgeted fixed overhead in 20x1 was $336,000 and budgeted production was 42,000 kayaks. The year’s actual production was 42,000 units, of which 36,000 were sold. Variable selling and administrative costs were $4 per unit sold; fixed selling and administrative costs were $88,000.

Required:
A. Calculate the product cost per kayak under (a) absorption costing and (b) variable costing.
B. Prepare operating income statements for the year using (a) absorption costing and (b) variable costing.
C. Reconcile reported operating income under the two methods using the shortcut method.

Speedy auto repairs uses a job-order costing system. the company’s direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics’ hourly wages. speedy’s overhead costs include various items, such as the shop manager’s salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room. the company applies all of its overhead costs to jobs based on direct labor-hours. at the beginning of the year, it made the following estimates: direct labor-hours required to support estimated output 20,000 fixed overhead cost $ 350,000 variable overhead cost per direct labor-hour $ 1.00 required: 1. compute the predetermined overhead rate. 2. during the year, mr. wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. the following information was available with respect to his job: direct materials $ 590 direct labor cost $ 109 direct labor-hours used 6