Full versus Variable Costing Jackson Jones Corp. (JJC) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military applications. The part sells for $45 per unit and had sales of 3,600 units in the current year, 2009. JJC has 400 units available for sale at the end of 2009 and is projecting sales of 4,400 units in 2010. JJC is planning the same production level for 2010 as in 2009, 4,000 units. The variable manufacturing costs for JJC are $16 and the variable selling costs are only $.50 per unit. The fixed manufacturing costs are $100,000 per year and the fixed selling costs are $500 per year.
Required Prepare the following, using a spreadsheet:
1. An income statement for 2009 and 2010 using full costing.
2. An income statement for 2009 and 2010 using variable costing.
3. A reconciliation and explanation of the difference in the operating income resulting from the full- and variable-costing methods.
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