4. Prepare an income statement for the company for 2019 under absorption costing. 5. Prepare an income statement for the company for 2019 under variable costing. 6. Prepare a schedule to convert variable costing income to absorption costing income for each of the years 2018 and 2019.
4. Prepare an income statement for the company for 2019 under absorption costing. 5. Prepare an income statement for the company for 2019 under variable costing. 6. Prepare a schedule to convert variable costing income to absorption costing income for each of the years 2018 and 2019.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
answer 4,5 6
![Berk Company began operations on January 5, 2018. Cost and sales information for its first
two calendar years of operations are summarized below.
Manufacturing costs
Direct materials..
Direct labor.....
Factory overhead costs
Variable overhead...
Fixed overhead (per year)...
Nonmanufacturing costs
Variable selling and administrative......
Fixed selling and administrative...
$80 per unit
$120 per unit
$30 per unit
$14,000,000
$10 per unit
$ 8,000,000
Production and sales data
Units produced, 2018.
Units sold, 2018......
Units in ending inventory, 2018......
Units produced, 2019.
Units sold, 2019.....
Units in ending inventory, 2019...
Sales price per unit...
200,000 units
140,000 units
60,000 units
80,000 units
140,000 units
0 units
$600 per unit
Required
1. Prepare an income statement for the company for 2018 under absorption costing.
2. Prepare an income statement for the company for 2018 under variable costing.
3. Explain the source (s) of the difference in reported income for 2018 under the two costing
methods.
4. Prepare an income statement for the company for 2019 under absorption costing.
5. Prepare an income statement for the company for 2019 under variable costing.
6. Prepare a schedule to convert variable costing income to absorption costing income for
each of the years 2018 and 2019.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2da59b79-efcb-4504-a5e9-dff0d8563be1%2F41680769-b795-4d4c-8881-f17e984605ea%2Fg0fesgc_processed.png&w=3840&q=75)
Transcribed Image Text:Berk Company began operations on January 5, 2018. Cost and sales information for its first
two calendar years of operations are summarized below.
Manufacturing costs
Direct materials..
Direct labor.....
Factory overhead costs
Variable overhead...
Fixed overhead (per year)...
Nonmanufacturing costs
Variable selling and administrative......
Fixed selling and administrative...
$80 per unit
$120 per unit
$30 per unit
$14,000,000
$10 per unit
$ 8,000,000
Production and sales data
Units produced, 2018.
Units sold, 2018......
Units in ending inventory, 2018......
Units produced, 2019.
Units sold, 2019.....
Units in ending inventory, 2019...
Sales price per unit...
200,000 units
140,000 units
60,000 units
80,000 units
140,000 units
0 units
$600 per unit
Required
1. Prepare an income statement for the company for 2018 under absorption costing.
2. Prepare an income statement for the company for 2018 under variable costing.
3. Explain the source (s) of the difference in reported income for 2018 under the two costing
methods.
4. Prepare an income statement for the company for 2019 under absorption costing.
5. Prepare an income statement for the company for 2019 under variable costing.
6. Prepare a schedule to convert variable costing income to absorption costing income for
each of the years 2018 and 2019.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education