Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows:
Hi-Tech started March with 1,000 cell phones that had variable costs of $28 per phone and fixed manufacturing costs of $2 per phone. Hi-Tech uses a FIFO cost flow.
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If the company pays bonuses to the production manager for keeping production cost per unit under $34.00 per cell phone, under which costing method will the manager earn a bonus for April?
A) Variable costing
B) Absorption costing
C) Both variable and absorption costing
D) Neither variable nor absorption costing

Question

Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows:
 Hi-Tech started March with 1,000 cell phones that had variable costs of $28 per phone and fixed manufacturing costs of $2 per phone. Hi-Tech uses a FIFO cost flow.
-
If the company pays bonuses to the production manager for keeping production cost per unit under $34.00 per cell phone, under which costing method will the manager earn a bonus for April?
A) Variable costing 
B) Absorption costing 
C) Both variable and absorption costing 
D) Neither variable nor absorption costing

Quizplus · Accepted Answer

The Answer of Hi-Tech manufactures basic cell phones for cell phone service providers. Data for March and April's production follows:
 Hi-Tech started March with 1,000 cell phones that had variable costs of $28 per phone and fixed manufacturing costs of $2 per phone. Hi-Tech uses a FIFO cost flow.
-
If the company pays bonuses to the production manager for keeping production cost per unit under $34.00 per cell phone, under which costing method will the manager earn a bonus for April?
A) Variable costing 
B) Absorption costing 
C) Both variable and absorption costing 
D) Neither variable nor absorption costing

Hi-Tech Manufactures Basic Cell Phones for Cell Phone Service Providers