Answered: The Dorset Corporation produces and…

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 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...

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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:
a. Prepare an income statement for the year using absorption costing
b. Prepare an income statement for the year using variable costing
c. Reconcile the absorption costing

d. variable costing net operating income figures

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