Reference no: EM132812876

Question - MST Manufacturing Company produces a single product. Company's operations last year data as under:

Units in beginning inventory 0

Units produced 5,000

Units sold 4,900

Selling price per unit $200

Variable costs per unit:

Direct materials $60

Direct labor $70

Variable manufacturing overhead $5

Variable selling and administrative $2

Fixed costs in total:

Fixed manufacturing overhead $40,000

Fixed selling and administrative $60,000

Required -

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

b. Make the income statement for the year using absorption costing.

c. Make the income statement for the year using variable costing.

d. What the reconciling the difference in net operating income between absorption and variable costing for the year.