Exercise 19-9 (Algo) Absorption costing and variable costing income statements LO P2Rey Company’s only product sells for $235 per unit. Data for its first year of operations follow. Direct materials$ 39per unitDirect labor$ 47per unitVariable overhead$ 5per unitFixed overhead$ 168,000per yearVariable selling and administrative expenses$ 37per unitFixed selling and administrative expenses$ 238,000per yearUnits produced and sold24,000units 1. Prepare an income statement for the year using absorption costing2. Prepare an income statement for the year using variable costing.

Income statement refers to the one of the financial statements of the company which is prepared at…

Answered: Exercise 19-9 (Algo) Absorption costing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Exercise 19-9 (Algo) Absorption costing and variable costing income statements LO P2

Rey Company’s only product sells for $235 per unit. Data for its first year of operations follow.

Direct materials	$ 39	per unit
Direct labor	$ 47	per unit
Variable overhead	$ 5	per unit
Fixed overhead	$ 168,000	per year
Variable selling and administrative expenses	$ 37	per unit
Fixed selling and administrative expenses	$ 238,000	per year
Units produced and sold	24,000	units

1. Prepare an income statement for the year using absorption costing
2. Prepare an income statement for the year using variable costing.

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