C O | ezto.mhedu ation.com/hn..tpx 4. The Dean Corporation produces and sells a

Question

C O | ezto.mhedu ation.com/hn..tpx 4. The Dean Corporation produces and sells a single product. The following data refer to the year just Units produced Units sold 25,200 22,800 421 S 18 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 35 Fixed manufacturing overhead (total S 501,600 S 237 $ 57 $ 428,400 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 per u Absorption costing Variable costing S

Explanation / Answer

(a) Comptation cost Per Unit Cost Per Under Adbosrption costing Amount in $ Direct materials 237 Direct labour 57 variable manufacturing over head 35 Fixed manufacturing over head (428400/25200) 17 Total Cost per Unit 346 Cost Per Under Variable costing Amount in $ Direct materials 237 Direct labour 57 variable manufacturing over head 35 Total variable Cost per Unit 329 (b) income Statemetn under Absorbption costing Amount in $ Sales (22800*$421 9598800 less: Cost of goods sold (22800*$346) 7888800 gross margin 1710000 Less: Selling & Admin Expenses Variable Expenses (22800*18 410400 Fixed expenses 501600 net Operating income 798000 (C ) income Statement Unde rContribution format Amount in $ Sales (22800*$421 9598800 less:variable cost of goods sold (22800*$329) 7501200 2097600 less: variable selling & Admin Expenses (22800*18) 410400 Contribution margin 1687200 Fixed Expenses Fixed manufacturing Over head 428400 Fixed Selling & Admin Expenses 501600 Net Operating income 757200 (D ) Reconcile the Absorption costing anf variable costing income Amount in $ net operating income under variable costing 757200 Add: Fixed manufactuirng over head Defferd un inventory (25200-22800)*$17 40800 net operating Income under Absorption Costing 798000

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