FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:
Beginning inventory
Units produced
Units sold
Selling price per unit
Selling and administrative expenses:
Variable per unit
Fixed per year
0
31,600
29,600
$ 414
$ 21
$ 621,600
Manufacturing costs:
Direct materials cost per unit
Direct labor cost per unit
Variable manufacturing overhead cost per unit
Fixed manufacturing overhead per year
Assume that direct labor is a variable cost.
Required:
a. Compute the unit product cost under both the absorption costing and variable costing approaches.
b. Prepare an income statement for the year using absorption costing.
c. Prepare an income statement for the year using variable costing.
d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.
$ 216
$ 50
$37
$ 379,200
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Transcribed Image Text:The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed per year 0 31,600 29,600 $ 414 $ 21 $ 621,600 Manufacturing costs: Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead per year Assume that direct labor is a variable cost. Required: a. Compute the unit product cost under both the absorption costing and variable costing approaches. b. Prepare an income statement for the year using absorption costing. c. Prepare an income statement for the year using variable costing. d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above. $ 216 $ 50 $37 $ 379,200
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