Question: The Dean Company produces and sells a single product. The following data refer to the year just completed:
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Selling Price
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$ 350
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|
|
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Units in beginning Inventory
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0
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Units Produced
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20000
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Units sold
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19000
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|
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Variable Costs per unit:
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Direct materials
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$ 190
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Direct labor
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$ 40
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Variable manufacturing overhead
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$ 25
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Variable selling and admin
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$ 10
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Fixed Costs:
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Fixed manufacturing overhead
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$ 250,000
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Fixed selling and admin
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$ 225,000
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Assume that direct labor is a variable cost.
Required:
a. Compute the cost of a single unit of product 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.