EX 20-8 Estimated income statements, using absorption and variable costing Obj. 1, 2e Prior to the first month of operations ending October 31, Marshall Inc. estimated the followings, operating results:00Sales (40,000 x $90) .....Manufacturing costs (40,000 units):Direct materials..Direct labor .....Variable factory overhead .Fixed factory overhead...Fixed selling and administrative expenses.Variable selling and administrative expenses..s)$3,600,0001,440,000480,000DW240,000120,00075,000200,000The company is evaluating a proposal to manufacture 50,000 units instead of 40,000 units,thus creating an ending inventory of 10,000 units. Manufacturing the additional units will notchange sales, unit variable factory overhead costs, total fixed factory overhead cost, or totalselling and administrative expenses.A. Prepare an estimated income statement, comparing operating results if 40,000 and 50,000 unitsare manufactured in (1) the absorption costing format and (2) the variable costing format.В.What is the reason for the difference in income from operations reported for thetwo levels of production by the absorption costing income statement?

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A. Prepare an estimated income statement, comparing operating results if 40,000 and 50,000 units are manufactured in (1) the absorption costing format and (2) the variable costing format. В. What is the reason for the difference in income from operations reported for the two levels of production by the absorption costing income statement?

A. Prepare an estimated income statement, comparing operating results if 40,000 and 50,000 units are manufactured in (1) the absorption costing format and (2) the variable costing format. В. What is the reason for the difference in income from operations reported for the two levels of production by the absorption costing income statement?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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