1. Prepare an income statement for the company using variable costing. 2. Prepar
ID: 2502489 • Letter: 1
Question
1. Prepare an income statement for the company using variable costing.
2. Prepare an income statement for the company using absorbtion costing
3. Under what circumstances reported income identical under both absorption costing and variable costing?
Sims Company, a manufacturer of in-home decorative fountains, began operations on September 1 of the current year. Its cost and sales information for this year follows.
Sims Company, a manufacturer of in-home decorative fountains, began operations on September 1 of the current year. Its cost and sales information for this year follows.
Explanation / Answer
Prepare an income statement for the company using variable costing.
Stonehenge Inc. a manufacturer of landscaping blocks, began operations on April 1 of the current year. During this time, the company produced 750,000 units and sold 720,000 units at a sales price of $9 per unit. Cost information for this period is shown below.
Produciton costs
Direct Materials $1.80 per unit
Direct Labor $.30 per unit
Variable overhead $495,000 in total
Fixed Overhead $450,000 in total
Non-Production costs
Variable selling and administrative $18,000 in total
Fixed selling and administrative $53,000 in total
Prepare an income statement for the company using absorbtion costing
igital Edge Inc. assembles and sells MP3 players. The company began operations on May 1, 2010, and operated at 100% of capacity during the first month. The following data summarize the results for May:
Sales (14,000 units)
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