Problem 4. Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in Net Operating Income Borunda Corporation has provided the following data for its two most recent years of operation: Selling price per unit Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative expenses: Variable selling and administrative expense per unit sold Fixed selling and administrative expense per year Units in beginning inventory Units produced during the year Units sold during the year Units in ending inventory Year 1 0 10,000 8,000 2,000 Year 2 2,000 12,000 12,000 2,000 $83 $9 $7 $3 $360,000 $6 $77,000 Required: a. Assume the company uses absorption costing. Prepare an income statement for each year. b. Assume the company uses variable costing. Prepare an income statement for each year. c. Prepare a report in good form reconciling the variable costing and absorption costing net incomes.

Problem 4. Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in Net Operating Income Borunda Corporation has provided the following data for its two most recent years of operation: Selling price per unit Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative expenses: Variable selling and administrative expense per unit sold Fixed selling and administrative expense per year Units in beginning inventory Units produced during the year Units sold during the year Units in ending inventory Year 1 0 10,000 8,000 2,000 Year 2 2,000 12,000 12,000 2,000 $83 $9 $7 $3 $360,000 $6 $77,000 Required: a. Assume the company uses absorption costing. Prepare an income statement for each year. b. Assume the company uses variable costing. Prepare an income statement for each year. c. Prepare a report in good form reconciling the variable costing and absorption costing net incomes.

Name: Problem 4. Variable and Absorption Costing Unit Product Costs and Inc
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Description: Problem 4. Variable and Absorption Costing Unit Product Costs and IncomeStatements; Explanation of Difference in Net Operating IncomeBorunda Corporation has provided the following data for its two most recent years ofoperation:Selling price per unit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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