The EG Company Produces and Sells One Product

Essay

The EG Company produces and sells one product.The following data refer to the year just completed: 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.