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The Dorset Corporation Produces and Sells a Single Product

Question 261

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The Dorset Corporation produces and sells a single product.The following data refer to the year just completed:
The Dorset Corporation produces and sells a single product.The following data refer to the year just completed:    Assume that direct labor is a variable cost. Required: a.Compute the unit product cost 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 net operating income figures in (b)and (c)above. Assume that direct labor is a variable cost.
Required:
a.Compute the unit product cost 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 net operating income figures in (b)and (c)above.

Correct Answer:

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a.Cost per unit under absorption costing...

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