The Dean Company Accounting
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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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Solution Summary
This solution illustrates how to compute the cost of a single unit of product under both the absorption costing and variable costing approaches, how to prepare an income statement for the year using absorption costing, and how to prepare an income statement for the year using variable costing.
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