Question

Captain America makes dessert pie for large supermarket chains. The single serving pies are frozen and can last in storage for months. Cost information on the pies is as follow:

Ingredients used for pies $275,000

Wages used to make pies 120,000

Overhead of the factory-variable 65,000

-fixed 125,000

Office staff   75,000

Sales staff 150,000

Steve's Salary   70,000

Captain America made 500,000 pies this past year but only sold 450,000 to his customers. he sells them for $3 per pie.steve tells you that the office and sales staff are variable costs while his salary is fixed.

Create the Absorption income statement and Variable income statement.

Answer 1

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