Chapter 5, Problem 5.2E

1.

To determine

Concept introduction:

Deferred expenses:

The expenses that are already incurred in the past but they are not utilized by the business are considered as deferred expenses. These expenses are considered as an asset for the business the benefit can be utilized against the expenses paid in the past.

Requirement 1:

The fixed manufacturing overhead deferred to the next period.

2.

To determine

Concept introduction:

Income statement:

The income statement tells about the revenues earned and expenses incurred by the company in a specific period of time. It is also known as operations statement, earnings statement, revenue statement or profit, and loss statement.

Requirement 2

Prepare an income statement using a variable costing method and explain the difference between the results of the variable costing method and the absorption costing method.