erly below).The production volume variance for 2021 was determined from the fixed overhead rate of $175 per unit ($1,225,000/7,000 budgetedunits). Because the actual production level was 600 units short of the budgeted level in 2021 (7,000 -6,400), the amount of theproduction volume variance in 2021 was 600 x $175 $105,000. The production volume variance is underapplied because the actualproduction level is less than budgeted, and the production volume variance is therefore added back to cost of goods sold todetermine the amount of cost of goods sold in the full costing income statement. The full costng income statement for 2021 is shownbelow:SalesCost of goods sold:Beginning inventoryCost of goods producedCost of goods available for saleLess ending inventoryCost of goods sold:Plus unfavorable production volume varianceAdjusted cost of goods soldGross marginLess selling and administrative costsVariableFixedOperating income$ 1,100,0008,800,000$ 9,900,0001,375,000Complete this question$ 775,000120,00012,989,000$ 8,525,000105,000$8,630,000$4,359,000895,000$ 3,464,000Required:1. Using the full costing method, prepare the income statement for 2022.2-a. Using variable costing, prepare an income statement for each period.2-b. Prepare a reconciliation of the difference each year in the operating income resulting from the full- and variable-costing methods.

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Required: 1. Using the full costing method, prepare the income statement for 2022. 2-a. Using variable costing, prepare an income statement for each period. 2-b. Prepare a reconciliation of the difference each year in the operating income resulting from the full- and variable-costing methods. Complete this question

Required: 1. Using the full costing method, prepare the income statement for 2022. 2-a. Using variable costing, prepare an income statement for each period. 2-b. Prepare a reconciliation of the difference each year in the operating income resulting from the full- and variable-costing methods. Complete this question

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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