**Security Technology Incorporated (STI)****Overview:**STI is a manufacturer of electronic control systems for special-duty auto transmissions, primarily used in police and military applications. The unit price is $61, and sales figures are given for 2021 and projected for 2022.**Key Information:**- **Sales in 2021:** 24,300 units- **Projected Sales in 2022:** 26,900 units- **No inventory at the beginning of 2021**- **Planned Production Level for 2022:** 25,600 units- **Variable Manufacturing Costs:** $22 per unit- **Variable Selling Costs:** $0.40 per unit- **Fixed Manufacturing Costs:** $128,000 per year- **Fixed Selling Costs:** $560 per year**Requirements:**1. **Prepare an Income Statement for Each Year Using Full Costing.**2. **Prepare an Income Statement for Each Year Using Variable Costing.**3. **Prepare a Reconciliation of the Difference Each Year in Operating Income Resulting from the Full and Variable Costing Methods.****Income Statement (Blank Format):**### SECURITY TECHNOLOGY INCORPORATED**Full Costing** **Income Statement** | | **2021** | **2022** ||----|----------|----------|| **Sales** | | || Less: Cost of goods sold | | || | | || Available for sale | | || | | || Cost of goods sold | | || **Gross margin** | | || Less: Selling and administrative costs | | || | | || **Operating income** | | |**Instructions for Preparing the Statements:**- Calculate total sales based on given unit sales and price.- Deduct the cost of goods sold (COGS) developed from production and inventory data.- Determine gross margin by subtracting the COGS from sales.- Subtract selling and administrative costs to find operating income.Tabs for calculations: Required 1, Required 2, and Required 3 guide step-by-step through preparing these financial statements. **Security Technology Incorporated (STI) Overview**Security Technology Incorporated (STI) specializes in manufacturing an electronic control system for specific special-duty auto transmissions, primarily used in police and military applications. The part is sold at a price of $61 per unit. Here is a summary of the company’s manufacturing and sales data:- **2021 Sales:** 24,300 units- **Projected 2022 Sales:** 26,900 units- **Production for 2021 and 2022:** 25,600 units annually- **Variable Manufacturing Cost per Unit:** $22- **Variable Selling Cost per Unit:** $0.40- **Fixed Manufacturing Costs:** $128,000 per year- **Fixed Selling Costs:** $560 per year**Income Statement Requirements:**1. Prepare an income statement for each year (2021 and 2022) using full costing.2. Prepare an income statement for each year using variable costing.3. Reconcile the difference in operating income between full and variable costing methods for each year.**Graphical Explanation:**The image provides a table layout for constructing an income statement under variable costing for the years 2021 and 2022. The table includes sections to fill in the values for:- **Sales Revenue:** Total income from sales.- **Cost of Goods Sold (COGS):** Direct costs attributable to the production of the goods sold.- **Contribution Margin:** Sales revenue minus variable costs.- **Selling and Administrative Costs:** Expenses related to selling and administration.- **Operating Income:** Profit after all operating expenses are deducted from the gross profit.Each section allows an entry for the respective year to streamline calculations and comparisons.

Absorption costing and Variable Costing: Fixed Overhead costs are allocated across all units…

Security Technology Incorporated (STI) Is a manufacturer of an electronic control system used in the manufacture of certain special- duty auto transmissions used primarly 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 varlable 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 varlable costing. 3. Prepare a reconcillation of the difference each year in the operating income resulting from the full and variable costing methods. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare an income statement for each year using full costing. (Round your final answers to nearest vwhole dollar amount.) SECURITY TECHNOLOGY INCORPORATED Full Costing Income Statement 2021 2022 Less: Cost of goods sold Available for sale Cost of goods sold Gross margin Less: Selling and administrative costs Operating income < Required 1 Required 2 >

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q