Question: Ekin Inc manufactures and sells high quality sporting goods equipment

Ekin Inc. manufactures and sells high- quality sporting goods equipment under its highly recognizable inverse swoosh logo. The company began operations on January 1, 2014, and operated at 100% of capacity (99,000 units) during the first month, creating an ending inventory of 9,000 units. During February, the company produced 90,000 garments during the month but sold 99,000 units at $ 250 per unit. The February manufacturing costs and selling and administrative expenses were as follows:

a. Prepare an income statement according to the absorption costing concept for February.
b. Prepare an income statement according to the variable costing concept for February.
c. What is the reason for the difference in the amount of income from operations reported in (a) and(b)?
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  • CreatedJune 27, 2014
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