The EG Company produces and sells single product. The following data refer to th

Question

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

Assume that direct labor is a variable cost.

Compute the cost of a single unit of product under both the absorption costing and variable costing approaches. (Omit the "$" sign in your response.)

Prepare an income statement for the year using absorption costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Prepare a contribution format income statement for the year using variable costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above. (Omit the "$" sign in your response.)

  Beginning inventory 0   Units produced 29,500   Units sold 20,400   Selling price per unit $ 469   Selling and administrative expenses:   Variable per unit $ 19   Fixed (total) $ 346,800   Manufacturing costs:   Direct materials cost per unit $ 203   Direct labor cost per unit $ 50   Variable manufacturing overhead cost per unit $ 30   Fixed manufacturing overhead (total) $ 442,500

Explanation / Answer

Solution:

a.

b.

c.

d.

Absorption costing Variable costing Direct Material 203 203 Direct Labor 50 50 Variable manufacturing overhead 30 30 Fixed Manufacturing overhead - 442,500 / 29,500                                       15 0 Single unit cost 298 283

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