Reference no: EM132984652

Question - The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:

Beginning inventory 0

Units produced 28,000

Units sold 24,000

Selling price per unit $466

Selling and administrative expenses:

Variable per unit $21

Fixed per year $336,000

Manufacturing costs:

Direct materials cost per unit $296

Direct labor cost per unit $57

Variable manufacturing overhead cost per unit $34

Fixed manufacturing overhead per year $448,000

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. Make an income statement for the year using absorption costing.

c. Make 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.