| The EG Company produces and sells one product. The following data refer to the year just completed: |
| Beginning inventory | 0 | |
| Units produced | 28,100 | |
| Units sold | 21,900 | |
| Sales price per unit | $ | 410 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 23 |
| Fixed (total) | $ | 306,600 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 229 |
| Direct labor cost per unit | $ | 58 |
| Variable manufacturing overhead cost per unit | $ | 36 |
| Fixed manufacturing overhead | $ | 421,500 |
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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 a contribution format 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. |