Santana Rey expects sales of Business Solutions’s line of computer workstation furniture to equal 300 workstations (at a sales price of $3,300 each) for 2019. The workstations’ manufacturing costs include the following.               Direct materials $ 750   per unit   Direct labor $ 400   per unit   Variable overhead $ 60   per unit   Fixed overhead $ 24,000   per year     The selling expenses related to these workstations follow.             Variable selling expenses $ 45 per unit   Fixed selling expenses $ 3,500 per year     Santana is considering how many workstations to produce in 2019. She is confident that she will be able to sell any workstations in her 2019 ending inventory during 2020. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations. Required: 1. Complete the following income statements using absorption costing. 2. Complete the following income statements using variable costing.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Santana Rey expects sales of Business Solutions’s line of computer workstation furniture to equal 300 workstations (at a sales price of $3,300 each) for 2019. The workstations’ manufacturing costs include the following.
 

           
Direct materials $ 750   per unit  
Direct labor $ 400   per unit  
Variable overhead $ 60   per unit  
Fixed overhead $ 24,000   per year  
 


The selling expenses related to these workstations follow.
 

         
Variable selling expenses $ 45 per unit  
Fixed selling expenses $ 3,500 per year  
 


Santana is considering how many workstations to produce in 2019. She is confident that she will be able to sell any workstations in her 2019 ending inventory during 2020. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations.

Required:
1. Complete the following income statements using absorption costing.
2. Complete the following income statements using variable costing.

 

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