QUESTION 1  QUESTION 1: VARIABLE COSTING QUESTION Bairstow Company manufactures and sells a single product. The following costs were incurred during 2021, the company’s first year of operations:   Variable Costs per unit:     Production:                     Direct materials $ 6.00                   Direct labour  $ 9.00                   Variable Manufacturing Overhead  $ 3.00  Selling and administrative $ 4.00 FIXED COSTS PER YEAR   Manufacturing Overhead $ 300,000 Selling and administrative $ 190,000   During 2021, the company produced 25,000 units and sold 20,000 units. The selling price of the company’s product is $ 50 per unit.   Required: 1. Assume that the company uses  the absorption costing method: Compute the cost to produce one unit of product. Prepare an income statement for 2021  2. Assume the company uses the variable costing method:      a. Compute the cost to produce one unit of product.       b.  Prepare an income statement for 2021.  3. Reconcile the variable costing and absorption costing operating incomes. Explain the reasons for the differences between the variable costing and absorption costi

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.