Question

Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 4,900 tons of plastic and sold 3,920 tons. In 2017, the production and sales results were exactly reversed, In each year, the selling price per ton was $2,500 variable manufacturing costs were 18% of the sales price of units produced, variable selling expenses were 8% of the selling price of units sold, fixed manufacturing costs were $3,626,000, and fixed administrative expenses were $510,000. Prepare indome statements for each year using variable costing Income Statement For the Year Ended December 31, 2016 Variable Costing Sales Variable Cost of Goods Sold Inventory, January 1 Variable Costs of Goods Manufactured Costs of Goods Available for Sale Inventory, December 31 Variable Cost of Goods Sold Variable Selling Expenses Contribution Margin Fixed Manufacturing Overhead Fixed Administrative Expenses Net Income/Loss) ACKSON COMPANY Income Statement Variable Costing Prepare income statements for each year using absorption costing. JACKSON COMPANY Income Statement Absorption Costing JACKSON COMPANY Income Statement Absorption Costing JACKSON COMPANY Income Statement Absorption Costing eTextbook and Media eTextbook and Media Reconcile the differences each year in net income under the two costing approaches. 2016 2017 Variable costing net income Fixed manufacturing overhead expensed with variable costing $ Less: Fixed manufacturing averhead expensed with absorption costing Difference Absorption costing net income

Answer 1

Answe All wokin t of -the angoes * Undes absosption costing, manufactuing overhed fiked) som cost of the psoduct an arse appostfoned x Vasiable costing income statements 2016 Units Pooduced Units sold Sales Revenue Less: Varsiable cost toco 3500 3500 LtO 00 g0o0oO Vasiable mahu-factusing cost vasiable gelling expenses 050000 200000 100000 200000 Total Vasiable T50000 200000o cost

contoibution 5950000 Less: Fined Costs Manufactusing 2g00000 2g00000 Cos Administsat000 500000 enses exp Total Fired 33000o0 330000O6 EAp enses g5oo00 LoSS

3 Absosption costing Tncome Statements: Units Psoduced Units Spld Sales Revenue Less: cost of Goods Sold 4000 3500 3500 +00o g0000oco 0500 00 200000 ooooo !!ד 5oooo |800000 12000000 selling cost opening stock 2 o00oo CO Epenses Total cost 2363500 CLoSS)

x Re concliation; QOIG 2017 Varviable sting 50000 co 9T00000 et Income rked manufacturing 3300000 oves head eipend 33c0coo with vasiable costina Less: -firked manufactyoing 3881500 oveohead with abg0%ption costing 311500 Diffesence 12500 Absooptian 3500 881500 costing Net Jncome.