I dont understand the comments 4. The Dean Corporation produces and sells a sing

Question

I dont understand the comments

4. The Dean Corporation produces and sells a single product. The following data refer to the year just Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses Variable per unit Fixed (total Manufacturing costs Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit S35 Fixed manufacturing overhead (total 25.200 22,800 S 421 S18 S 501,600 S 237 S 57 $ 428,400 Assume that direct labor is a variable cost Required: the cost of a single unit of product under both the absorption costing and varlable costing per unit Absorption costing Variable costing

Explanation / Answer

Cost per unit A Absorption costing   346 Variable costing 329 *Calculation: Variable costing: Direct materials 237 Direct labor 57 Variable manufacturing overhead 35 Unit product cost 329 Absorption costing: Direct materials 237 Direct labor 57 Variable manufacturing overhead 35 Fixed manufacturing overhead (428400 / 25200) 17 Unit product cost 346 B Absorption costing income statement Sales (22800 * 421) 9598800 Cost of goods sold: Beginning inventory 0 Add: Cost of goods manufactured (25200 * 346) 8719200 Goods available for sale 8719200 Less: Ending inventory [(25200 - 22800) *346] 830400 7888800 Gross margin 1710000 less: Selling and administrative expenses: Variable selling and administrative (22800 * 18) 410400 Fixed selling and administrative 501600 912000 Net Income 798000 c Variable costing income statement: Sales (22800 * 421) 9598800 Less: Variable Expenses: Variable cost of goods sold: Beginning inventory 0 Add: Variable manufacturing costs (25200 * 329) 8290800 Goods available for sale 8290800 Less: Ending inventory [(25200 - 22800) *329] 789600 Variable cost of goods sold 7501200 Variable selling and administrative (22800 * 18) 410400 7911600 Contribution margin 1687200 Less: Fixed expenses: Fixed manufacturing overhead 428400 Fixed selling and administrative 501600 Net Income 757200 D Net operating income under variable costing 757200 Net operating income under absorption costing 798000

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