question 4

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The Dean Company produces and sells a single product. The following data refer to the year just completed:

Selling price

  

 $450         

     

Units in beginning Inventory

  

0

Units produced

  

25,000

Units sold

  

22,000
     
     

Variable costs per unit:

    

Direct materials

  

 $         200

Direct labor

  

 $           50

Variable manufacturing overhead

  

 $           30

Variable selling and admin

  

 $           15

     

Fixed Costs:

    

Fixed manufacturing overhead

  

 $   275,000

Fixed selling and admin

  

 $   230,000

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.

 

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