Chapter 6, Problem 6.15SE

Prepare income statements using variable costing and absorption costing with no change in inventory levels (Learning Objective 6)

Dalton’s Products manufactures a single product. Cost, sales, and production information for the company and its single product is as follows:

• Selling price per unit is $65
• Variable manufacturing costs per unit manufactured (includes direct materials [DM], direct labor [DL], and variable MOH) $31
• Variable operating expenses per unit sold $2
• Fixed manufacturing overhead (MOH) in total for the year $208,000
• Fixed operating expenses in total for the year $89,000
• Units manufactured and sold for the year 13,000 units

Requirements

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