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Prepare an income statement using variable costing

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Question - On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January:

Units

Production

50,000

Sales ($18 per unit)

42,000

Inventory, January 31

8,000


Manufacturing costs:

Variable

$575,000

Fixed

80,000

Total

$655,000


Selling and administrative expenses:

Variable

$ 35,000

Fixed

10,500

Total

$ 45,500


Required -

(a) Prepare an income statement using absorption costing.

(b) Prepare an income statement using variable costing.

Reference no: EM131814583

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