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The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:     Beginning inventory   0 Units produced   9,000 Units sold   7,000 Selling price per unit $ 47 Selling and administrative expenses:                 Variable per unit $ 4             Fixed per year $ 58,000 Manufacturing costs:                 Direct materials cost per unit $ 10             Direct labor cost per unit $ 6             Variable manufacturing overhead cost per unit $ 5             Fixed manufacturing overhead per year $ 90,000  Assume that direct labor is a variable cost. Required: Prepare an income statement for the year using absorption costing Prepare an income statement for the year using variable costing Reconcile the absorption costing and variable costing net operating income figures

The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:     Beginning inventory   0 Units produced   9,000 Units sold   7,000 Selling price per unit $ 47 Selling and administrative expenses:                 Variable per unit $ 4             Fixed per year $ 58,000 Manufacturing costs:                 Direct materials cost per unit $ 10             Direct labor cost per unit $ 6             Variable manufacturing overhead cost per unit $ 5             Fixed manufacturing overhead per year $ 90,000  Assume that direct labor is a variable cost. Required: Prepare an income statement for the year using absorption costing Prepare an income statement for the year using variable costing Reconcile the absorption costing and variable costing net operating income figures

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 28P: The following information pertains to Vladamir, Inc., for last year: There are no work-in-process...
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The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:    

Beginning inventory

 

0

Units produced

 

9,000

Units sold

 

7,000

Selling price per unit

$

47

Selling and administrative expenses:

 

 

            Variable per unit

$

4

            Fixed per year

$

58,000

Manufacturing costs:

 

 

            Direct materials cost per unit

$

10

            Direct labor cost per unit

$

6

            Variable manufacturing overhead cost per unit

$

5

            Fixed manufacturing overhead per year

$

90,000

 Assume that direct labor is a variable cost.

Required:

  1. Prepare an income statement for the year using absorption costing
  2. Prepare an income statement for the year using variable costing
  3. Reconcile the absorption costing and variable costing net operating income figures
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