Exercise 19-7 (Algo) Income reporting under absorption costing and variable costing LO P2 Sims Company began operations on January 1. Its cost and sales information for this year follow. Direct materials $ 40 per unit Direct labor $ 60 per unit Variable overhead $ 40 per unit Fixed overhead $ 6,300,000 per year Variable selling and administrative expenses $ 11 per unit Fixed selling and administrative expenses $ 5,000,000 per year Units produced 105,000 units Units sold 75,000 units Sales price $ 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.
Exercise 19-7 (Algo) Income reporting under absorption costing and variable costing LO P2 Sims Company began operations on January 1. Its cost and sales information for this year follow. Direct materials $ 40 per unit Direct labor $ 60 per unit Variable overhead $ 40 per unit Fixed overhead $ 6,300,000 per year Variable selling and administrative expenses $ 11 per unit Fixed selling and administrative expenses $ 5,000,000 per year Units produced 105,000 units Units sold 75,000 units Sales price $ 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.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter2: Basic Managerial Accounting Concepts
Section: Chapter Questions
Problem 39E: Cost Classification Loring Company incurred the following costs last year: Required: 1. Classify...
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Exercise 19-7 (Algo) Income reporting under absorption costing and variable costing LO P2
Sims Company began operations on January 1. Its cost and sales information for this year follow.
| Direct materials | $ 40 | per unit |
|---|---|---|
| Direct labor | $ 60 | per unit |
| Variable |
$ 40 | per unit |
| Fixed overhead | $ 6,300,000 | per year |
| Variable selling and administrative expenses | $ 11 | per unit |
| Fixed selling and administrative expenses | $ 5,000,000 | per year |
| Units produced | 105,000 | units |
| Units sold | 75,000 | units |
| Sales price | $ 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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