Breedon Corporation produces a single product. Data concerning the company's operations last year appear below:
Units in beginning inventory............................................0
Units produced.....................................................12,000
Units Sold...........................................................11,250
Selling price per unit..................................................$90
Variable costs per unit:
Direct materials........................................................$20
Direct labor............................................................$10
Variable manufacturing overhead....................................$8
Variable selling and administrative...................................$5
Fixed costs in total:
Fixed manufacturing overhead...............................$180,000
Fixed selling and administrative..............................$150,000
Required:
a. Compute the unit product cost under both absorption and variable costing.
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. Prepare a report reconciling the difference in net operating income between absorption and variable costing for the year.