The Dean Company Produces and Sells a Single Product: a Laser

Essay

The Dean Company produces and sells a single product: a laser printer.The following data refer to the year just completed:
$\begin{array}{|l|r|}\hline \text { Beginning inventory } & \$ 0 \\\hline \text { Units produced } & 20,000 \\\hline \text { Units sold } & 19,000 \\\hline \text { Sales price per unit } & \$ 350 \\\hline \text { Selling and administrative expenses: } & \\\hline\text { Variable per unit } & \$ 10 \\\hline \text { Fixed (total) } & \$ 225,000 \\\hline \text { Manufacturing costs: } \\\hline \text { Direct materials cost per unit } & \$ 190 \\ \hline \text { Direct labour cost per unit } & \$ 40 \\\hline \text { Variable overhead cost per unit }& \$ 25 \\\hline\text { Fixed overhead (total) } & \$ 250,000\\\hline\end{array}$

Assume that direct labour 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.
d)Reconcile the absorption costing and variable costing operating income figures in b)and c)above.