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.

Question

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.

Quizplus · Accepted Answer

The Answer of 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.

The EG Company Produces and Sells One Product