. Preparing an income statement using absorption and direct costing. During the year 19X6, the Dumont Manufacturing Company produced 5,400 units and sold 6,000 units at $200 each. The costs incurred were as follows:

Instructions 1. Prepare an income statement for the year 19X6 using absorption costing. The beginning inventory was $150,000.
2. Prepare an income statement for the year 19X6 using direct costing. The beginning inventory was $100,000.
3. Prepare a reconciliation of the net income under direct costing and absorption costing.

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Materials (5,400 units at $40 per unit) Labor (5,400 units at $50 per unit) Manufacturing Overhead Fixed Variable (5.400 units at $10 per unit) $216,000 270,000 $200,000 54,000 254,000