Prepare an income statement for year using variable costing

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Problem - Sims Company, a manufacturer of tablet computers, began operations on January 1, 2015. Its cost and sales information for this year follows.

Manufacturing costs

Direct materials $ 35 per unit

Direct labor $ 55 per unit

Overhead costs for the year

Variable overhead $ 2,100,000

Fixed overhead $ 8,400,000

Selling and administrative costs for the year

Variable $ 775,000

Fixed $ 4,500,000

Production and sales for the year

Units produced 105,000 units

Units sold 75,000 units

Sales price per unit $ 360 per unit

1. Prepare an income statement for the year using variable costing.

2. Prepare an income statement for the year using absorption costing.

Reference no: EM132049726

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