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

Assume that direct labour 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.
d) Reconcile the absorption costing and variable costing operating income figures in b) and c) above.

Question

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

Assume that direct labour 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.
d) Reconcile the absorption costing and variable costing operating income figures in b) and c) above.

Quizplus · Accepted Answer

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

Assume that direct labour 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.
d) Reconcile the absorption costing and variable costing operating income figures in b) and c) above.

The Dean Company Produces and Sells a Single Product