Question: During Durton Company s first two years of operations the company

During Durton Company’s first two years of operations, the company reported absorption
costing operating income as shown below. Production and cost data for the two years are given:
The company’s $34 unit product cost is computed as follows:
Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8
Direct labour. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Variable manufacturing overhead. . . . . . . . . . . . . . . . . . . . . . 2
Fixed manufacturing overhead ($350,000 ÷ 25,000 units) . . 14
Unit product cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $34
Required:
1. Prepare a variable costing income statement for each year in the contribution format.
2. Reconcile the absorption costing and variable costing operating income figures for each year.

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  • CreatedJuly 08, 2015
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