Question 2 During Durton Company's first two years of operations, the company reported absorption costing...
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Question 2 During Durton Company's first two years of operations, the company reported absorption costing operating income as shown below. Production and cost data for the two years are given: ear 1 ear 2 Units produced Units sold 20,000 0,000 ear Year 2 ales (at $50 per unit) Cost of goods sold: S 1,000,000 500,000 Beginning inventory 0 170,000 Add cost of goods manufactured (at 850,000 850,000 $34 per unit) Goods available for sale Less ending inventory (at S34 per 850,000 1,020,000 170,000 unit) Cost of goods sold 320,000 480,000 340 140,000 Selling and administrative expenses ting income $ 10,000 The company's $34 unit product cost is computed as follows: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead ($350,000 25,000 units) Unit product cost S 8 10 14 S34 Required 1. 2. Prepare a variable costing income statement for each year in the contribution format. Reconcile the absorption costing and variable costing operating income figures for each year
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