Security Technology Incorporated (STI) Is a manufacturer of an electronic control system used in the manufacture of certaln 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 unlits 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 varlable 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. Requlred: 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 varlable costing methods. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your "Fixed overhead rate" answers to 2 decimal places, and other final answers to nearest vwhole dollar amount.) SECURITY TECHNOLOGY INCORPORATED Reconciling Difference in Operating Income Between Full and Variable Costing 2021 2022 Change in inventory in units Multiply times fixed overhead rate Difference in operating income < Required 2 Required 3>
Security Technology Incorporated (STI) Is a manufacturer of an electronic control system used in the manufacture of certaln 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 unlits 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 varlable 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. Requlred: 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 varlable costing methods. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your "Fixed overhead rate" answers to 2 decimal places, and other final answers to nearest vwhole dollar amount.) SECURITY TECHNOLOGY INCORPORATED Reconciling Difference in Operating Income Between Full and Variable Costing 2021 2022 Change in inventory in units Multiply times fixed overhead rate Difference in operating income < Required 2 Required 3>
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**Security Technology Incorporated (STI) Overview:**
STI is a manufacturer specializing in electronic control systems for special-duty auto transmissions, primarily serving police and military markets. The company sells each part for $61. In 2021, STI reported sales for 24,300 units and anticipates sales of 26,900 units in 2022. There was no inventory at the start of 2021, and the production for 2022 is set to match 2021 with 25,600 units.
- **Costs:**
- **Variable Manufacturing Cost**: $22 per unit
- **Variable Selling Cost**: $0.40 per unit
- **Fixed Manufacturing Cost**: $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. Reconcile the difference in operating income between full and variable costing methods.
**Instructions for Reconciliation:**
- Calculate the difference each year in operating income resulting from the two costing methods.
- Indicate negative amounts with a minus sign.
- Round the fixed overhead rate to two decimal places and final answers to the nearest whole dollar.
**Table for Reconciliation of Income Difference:**
**SECURITY TECHNOLOGY INCORPORATED**
| Reconciling Difference in Operating Income | Between Full and Variable Costing |
| --- | --- |
| **2021** | **2022** |
| Change in inventory in units | [Input Required] | [Input Required] |
| Multiply times fixed overhead rate | [Input Required] | [Input Required] |
| Difference in operating income | [Input Required] | [Input Required] |
Users are instructed to complete the income statements and reconcile differences by entering their answers in the designated tabs.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F91a1897c-6376-41f7-9c6e-a56c1adb050a%2F89841b5c-3991-41cc-8444-f28fdbcfb90c%2Ffqehdmf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Security Technology Incorporated (STI) Overview:**
STI is a manufacturer specializing in electronic control systems for special-duty auto transmissions, primarily serving police and military markets. The company sells each part for $61. In 2021, STI reported sales for 24,300 units and anticipates sales of 26,900 units in 2022. There was no inventory at the start of 2021, and the production for 2022 is set to match 2021 with 25,600 units.
- **Costs:**
- **Variable Manufacturing Cost**: $22 per unit
- **Variable Selling Cost**: $0.40 per unit
- **Fixed Manufacturing Cost**: $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. Reconcile the difference in operating income between full and variable costing methods.
**Instructions for Reconciliation:**
- Calculate the difference each year in operating income resulting from the two costing methods.
- Indicate negative amounts with a minus sign.
- Round the fixed overhead rate to two decimal places and final answers to the nearest whole dollar.
**Table for Reconciliation of Income Difference:**
**SECURITY TECHNOLOGY INCORPORATED**
| Reconciling Difference in Operating Income | Between Full and Variable Costing |
| --- | --- |
| **2021** | **2022** |
| Change in inventory in units | [Input Required] | [Input Required] |
| Multiply times fixed overhead rate | [Input Required] | [Input Required] |
| Difference in operating income | [Input Required] | [Input Required] |
Users are instructed to complete the income statements and reconcile differences by entering their answers in the designated tabs.
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