Rey Company’s single product sells at a price of $216 per unit. Data for its single product for its first year of operations follow.          Direct materials $ 20 per unit Direct labor $ 28 per unit Overhead costs       Variable overhead $ 6 per unit Fixed overhead per year $ 160,000 per year Selling and administrative expenses       Variable $ 18 per unit Fixed $ 200,000 per year Units produced and sold   20,000 units    1. Prepare an income statement for the year using absorption costing2. Prepare an income statement for the year using variable costing.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Rey Company’s single product sells at a price of $216 per unit. Data for its single product for its first year of operations follow.
 

       
Direct materials $ 20 per unit
Direct labor $ 28 per unit
Overhead costs      
Variable overhead $ 6 per unit
Fixed overhead per year $ 160,000 per year
Selling and administrative expenses      
Variable $ 18 per unit
Fixed $ 200,000 per year
Units produced and sold   20,000 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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