Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows.           Manufacturing costs       Direct materials $ 30 per unit Direct labor $ 50 per unit Overhead costs       Variable $ 20 per unit Fixed $ 8,400,000 (per year) Selling and administrative costs for the year       Variable $ 750,000   Fixed $ 4,000,000   Production and sales for the year       Units produced   105,000 units Units sold   75,000 units Sales price per unit $ 350 per unit    1. Prepare an income statement for the year using variable costing.2. Prepare an income statement for the year using absorption costing.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows.

 

       
Manufacturing costs      
Direct materials $ 30 per unit
Direct labor $ 50 per unit
Overhead costs      
Variable $ 20 per unit
Fixed $ 8,400,000 (per year)
Selling and administrative costs for the year      
Variable $ 750,000  
Fixed $ 4,000,000  
Production and sales for the year      
Units produced   105,000 units
Units sold   75,000 units
Sales price per unit $ 350 per unit
 

 
1. 
Prepare an income statement for the year using variable costing.
2. Prepare an income statement for the year using absorption costing.

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