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.

Value economics capital scarcity opportunity cost wealth labor trade-offs standard of living good a. condition of not having enough resources to produce all the things people want b. alternative choices made by consumers in the marketplace c. sum of those economic products that are tangible, scarce, useful, and transferable d. tools, equipment, machinery, and factories used in the production of goods and services e. tangible item that is economically useful or that satisfies an economic want f. quality of life based on the ownership of the necessities and luxuries that make life easier g. people with all their efforts, abilities, and skills h. cost of the next-best alternative use of money, time, or resources when one choice is made rather than another i. study of how people try to satisfy their needs through the careful use of scarce resources j. worth that can be expressed in dollars and cents