Question

p.1,3

Exercise 19-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows. Nanufacturing costs Direct materials Direct labor Overhead costs for the year 40 per unit 60 per unit Variable overhead $3,000,000 $7,000,000 Fixed overhead Selling and administrative costs for the year Variable Fixed $770,000 $4,250,000 Production and sales for the year Unite produced Units sold Sales price per unit 100,000 unite 70,000 unite 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. 3. Under what circumstance(s) is reported income identical under both absorption costing and variable costing?

Answer 1

Answer Variable Unsk psoduce unst Sale eveiie men Direet malerials Dieet Rabos vaniable manufaturing overhead 000o00 Co.gt 악 goods ayaa cost A joods Sold Legs : vadabh selling and adman&t oooo raive 46300oo Fed eXpen.ses 9000000

Fixe^ seltry and admineratve EX.pense名 Total Axed Expenses 3 3 gooO A bsorpthon ng income Statement untk ploduced unt sales Sales Revenue Cost e gooolk Sold Tove Direet natesials oven.. head Fredmanufact Cest a gts available for Sale Less closing Pove Cost Ss Sold 9o0000oo 6ooc0oo oocooO

e- osocooo van atle selling and adman&Stiative \ 0000 Fixed Settng andadmainestsative Total Seltn and anenstative 509 00oo ng Tncome Loss 54gooo 꽈.uat Sold and unats psoduced are Same,.these. woull be fdentical e a125001 ncome under both abso*phon Cestry an variable costs 5r2