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Please help. Security Technology Incorporated (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military applications. The part sells for $61 per unit and STI had sales of 24,300 units in the current year, 2021. STI had no inventory on hand at the beginning of 2021 and is projecting sales of 26,900 units in 2022. STI is planning the same production level for 2022 as in 2021, 25,600 units. The variable manufacturing costs for STI are $22, and the variable selling costs are only $0.40 per unit. The fixed manufacturing costs are $128,000 per year, and the fixed selling costs are $560 per year. Required: 1. Prepare an income statement for each year using full costing. 2. Prepare an income statement for each year using variable costing.

Please help. Security Technology Incorporated (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military applications. The part sells for $61 per unit and STI had sales of 24,300 units in the current year, 2021. STI had no inventory on hand at the beginning of 2021 and is projecting sales of 26,900 units in 2022. STI is planning the same production level for 2022 as in 2021, 25,600 units. The variable manufacturing costs for STI are $22, and the variable selling costs are only $0.40 per unit. The fixed manufacturing costs are $128,000 per year, and the fixed selling costs are $560 per year. Required: 1. Prepare an income statement for each year using full costing. 2. Prepare an income statement for each year using variable costing.

FINANCIAL ACCOUNTING
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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Security Technology Incorporated (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military applications. The part sells for $61 per unit and STI had sales of 24,300 units in the current year, 2021. STI had no inventory on hand at the beginning of 2021 and is projecting sales of 26,900 units in 2022. STI is planning the same production level for 2022 as in 2021, 25,600 units. The variable manufacturing costs for STI are $22, and the variable selling costs are only $0.40 per unit. The fixed manufacturing costs are $128,000 per year, and the fixed selling costs are $560 per year.

 

Required:

1. Prepare an income statement for each year using full costing.

2. Prepare an income statement for each year using variable costing.

SECURITY TECHNOLOGY INCORPORATED Full Costing Income Statement 2021 2022 Sales S 1,482,300 Less: Cost of goods sold Beginning inventory Cost of goods produced 691,200 691,200 Available for sale 691,200 Less: Ending inventory 35,100 Cost of goods sold 656,100 Gross margin 826,200 Less: Selling and administrative costs Variable 9,720 Fixed 560 Operating income IS 815,920 IS 903,280 < Required 1 Required 2 >
Transcribed Image Text:SECURITY TECHNOLOGY INCORPORATED Full Costing Income Statement 2021 2022 Sales S 1,482,300 Less: Cost of goods sold Beginning inventory Cost of goods produced 691,200 691,200 Available for sale 691,200 Less: Ending inventory 35,100 Cost of goods sold 656,100 Gross margin 826,200 Less: Selling and administrative costs Variable 9,720 Fixed 560 Operating income IS 815,920 IS 903,280 < Required 1 Required 2 >
SECURITY TECHNOLOGY INCORPORATED Variable Costing Income Statement 2021 2022 Sales S 1,482,300 Less: Cost of goods sold Beginning inventory Cost of goods produced 563,200 583,200 Available for sale 563,200 Less: Ending inventory 28,600 Cost of goods sold 534,600 Add: Variable selling and administrative 9,720 Contribution margin 937,980 Less: Fixed manufacturing costs 128,000 Less: Selling and administrative costs Fixed 560 560 Operating income 809,420 IS 909,780 < Required 1 Required 3 >
Transcribed Image Text:SECURITY TECHNOLOGY INCORPORATED Variable Costing Income Statement 2021 2022 Sales S 1,482,300 Less: Cost of goods sold Beginning inventory Cost of goods produced 563,200 583,200 Available for sale 563,200 Less: Ending inventory 28,600 Cost of goods sold 534,600 Add: Variable selling and administrative 9,720 Contribution margin 937,980 Less: Fixed manufacturing costs 128,000 Less: Selling and administrative costs Fixed 560 560 Operating income 809,420 IS 909,780 < Required 1 Required 3 >
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