Profit Centers: Comparison of Variable and Full Costing Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in 2009. These data summarize the 2009 and 2010 operations:
| 2009 | 2010 |
Sales | 1,800 units | 2,200 units |
Production: | 2,000 units | 2,000 units |
Production cost |
|
|
Factory—variable (per unit) | $0.60 | $0.60 |
—fixed | $1,000 | $1,000 |
Marketing—variable | $.40 | $.40 |
Administrative—fixed | $500 | $500 |
Required Prepare the following, using a spreadsheet.
1. An income statement for each year based on full costing.
2. An income statement for each year based on variable costing.
3. A reconciliation and explanation of the differences in the operating income resulting from using the full-costing method and variable-costing method.
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