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. SECURITY TECHNOLOGY INCORPORATEDFull CostingIncome Statement20212022SalesS 1,482,300Less: Cost of goods soldBeginning inventoryCost of goods produced691,200691,200Available for sale691,200Less: Ending inventory35,100Cost of goods sold656,100Gross margin826,200Less: Selling and administrativecostsVariable9,720Fixed560Operating incomeIS815,920IS903,280< Required 1Required 2 > SECURITY TECHNOLOGY INCORPORATEDVariable CostingIncome Statement20212022SalesS 1,482,300Less: Cost of goods soldBeginning inventoryCost of goods produced563,200583,200Available for sale563,200Less: Ending inventory28,600Cost of goods sold534,600Add: Variable selling and administrative9,720Contribution margin937,980Less: Fixed manufacturing costs128,000Less: Selling and administrative costsFixed560560Operating income809,420IS909,780< Required 1Required 3 >

1. Variable Costing - In this costing method, variable costs are considered while preparing the cost of goods sold. 2. Full Costing - In this costing method cost associated with the manufacturing of a product is considered in preparing the cost of goods sold.1. Full Costing - 2. Variable Costing -

Answered: Please help. Security Technology…

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 >

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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