Question

Posey Manufacturing has the following cost information available for 2009:
Direct materials ............ $6.00 per unit
Direct labor ............ $4.00 per unit
Variable manufacturing overhead .... $2.00 per unit
Variable S&A costs ......... $1.00 per unit
Fixed manufacturing overhead ...... $80,000
Fixed S&A costs .......... $25,000
During 2009, Posey produced 12,500 units, out of which 11,000 were sold for $60 each.

Required
A. Produce an income statement using variable costing.
B. Produce an income statement using absorption costing.
C. If Posey needs to take one of these income statements to the bank to apply for a loan, which one should he use? Why?
D. For internal decision making, which income statement would be more useful? Why?



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  • CreatedMarch 11, 2015
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