Prepare stonehenge income statement under absorption costing

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Reference no: EM131139716

Question:

Stonehenge Inc., a manufacturer of landscaping blocks, began operations on April 1 of the current year. During this time, the company produced 750,000 units and sold 720,000 units at a sales price of $9 per unit. Cost information for this period is shown below:

Production costs:

Direct labor

$.30 per unit

Direct materials

$1.80 per unit

Variable overhead

$495,000

Fixed overhead

$450,000

Non-production costs:

Variable selling expense

$18,000

Fixed administrative expenses

$53,000


Required:
a) Prepare Stonehenge"s income statement under absorption costing.

b) Prepare Stonehenge"s income statement under variable costing.

c) Reconcile the two net incomes.

Reference no: EM131139716

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