Griswold Company began operations in 2013. The company manufacturers a professional- grade vacuum cleaner and can make up to 18,000 units each year. Actual data for 2013 are given as follows:

Required
1. Prepare a 2013 income statement for Griswold Company using variable costing.
2. Prepare a 2013 income statement for Griswold Company using absorption costing.
3. Explain the differences in operating incomes obtained in requirement 1 and requirement 2.
4. Griswold’s management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this create for the supervisors? What modifications could Griswold management make to improve such a plan? Explainbriefly.

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Home Insert Page Layout FormulasData 18,000 17,500 $425 1 Units produced 2 Units sold 3 Selling price 4 Variable costs: 5 Manufacturing cost per unit produced 6 Drect materials 7 Direct manufacturing labor 8 Manufacturing overhead 9 Marketing cost per unit sold 10 Fixed costs 11 Manufacturing cost 12 Administrative cost 13 Marketing 30 25 60 45 1,080,000 965,450 1,366,400