1. a. and b. Absorption Costing Variable Costing
Year 1 Year 2 Year 1 Year 2
Variable production costs... $ 8 $ 8 $8 $8
Fixed manufacturing overhead costs:
$300,000 ÷ 20,000 units... 15
$300,000 ÷ 25,000 units... 12
Unit product cost ... $23 $20 $8 $8
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