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e Chegg Study | Guided Sc Connect , CSecure https//newconnect.mheducation.com/flow/connect.html Ch 06 Ex 6-3 6 Saved Help Save& Exit Submit my work Exercise 6-3 Income reporting under absorption costing and variable costing LO P2 12 points Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows Manufacturing costs eBook Direct materials Direct labor Overhead costs for the year 35 per unit 55 per unit Hint Variable overhead $2,203,e83 $8,808,883 Ask Fixed overhead Selling and administrative costs for the year Print Variable Fixed $ 750,e00 55,000,e03 Production and sales for the year Units produced Units sold Sales price per unit 110,000 units 80,000 units 350 per unit 1. Prepare an income statement for the year using variable costing 2. Prepare an income statement for the year using absorption costing 3. Under what circumstance(s) is reported income identical under both absorption costing and variable costing? Complete this question by entering your answers in the tabs below Pre of1 Next Graw 9:20 PM O Type here to search

Explanation / Answer

1) Income statement under varaible costing:

In above information based then find income statement with use of variable costing

Less: Cost of goods sold:

Opening Inventory $0

Add: cost of goods sold (80000 units @ $110) $8800000

less: closing of inventory $0

$8800000

Less: Selling & administration expenses:

variable overhead per year

less: Fixed expenses:

Fixed overhead per year $8800000

fixed selling overhead per year $5000000

$13800000

2) calculation net income under absorption costing

Less: cost of goods sold:

opening inventory $0

add: cost of goods sold (110000 units @ $190) $20900000

less: closing inventory $0

$20900000

Less: Selling & Administration expenses:

variable expenses for the year $750000

fixed expenses for the year $5000000

$5750000

3) if make or buy decisions are depends upon either variable costing approach or absorption costing approach

present scenarion we will comparison of profit performance varaible costing approach got highest income

Particulars Under absorption costing Under variable costing Direct material $35 $35 Direct Labour $55 $55 Variable overhead $20 $20 Fixed overhead $80 ---- Toatal $190 $110

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