The EG Company produces and sells single product. The following data refer to the year just completed:

Beginning inventory		0
Units produced		28,300
Units sold		26,600
Selling price per unit	$	446
Selling and administrative expenses:
Variable per unit	$	15
Fixed (total)	$	478,800
Manufacturing costs:
Direct materials cost per unit	$	252
Direct labor cost per unit	$	57
Variable manufacturing overhead cost per unit	$	31
Fixed manufacturing overhead (total)	$	594,300

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.

	Cost Per Unit
Absorption Costing
Variable Costing

b. Prepare an income statement for the year using absorption costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Absorption Costing Income Statement

Sales
Cost of goods sold
Gross Margin
Selling and administrative expenses
Net operating income (loss)

c.	Prepare a contribution format income statement for the year using variable costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

Variable Costing Income Statement

Sales
Variable expenses:
Variable cost of goods sold
Variable selling and administrative expenses
Contribution margin
Fixed expenses:
Fixed manufacturing overhead
Fixed selling and administrative expenses
Net operating income (loss)

d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above. (Omit the "$" sign in your response.)

Reconcilation of Variable Costing and Absorption Costing Net Operating Incomes

Net operating income under variable costing		$
Add/ Deduct	Fixed manufacturing overhead costs deferred in inventory under absorption costing
Net operating income under absorption costing		$