The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:

Assume that direct labor is a variable cost.

Required:

a$.$ Compute the unit product cost under both the absorption costing and variable costing approaches.

b$.$ Prepare an income statement for the year using absorption costing.

c$.$ Prepare an 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.

Complete this question by entering your answers in the tabs below.

Prepare an income statement for the year using variable costing.