Conceptual objectives:

1. Describe how absorption costing can result in over-production.
2. Explain the role of variable costing in pricing special orders.

Analytical objectives:

1. Compute and interpret break-even volume in units.

Procedural objectives:

1. Compute unit cost under both absorption and variable costing.
2. Prepare an income statement using absorption costing and using variable costing.
3. Prepare a contribution margin report.
4. Convert income under variable costing to the absorption cost basis.