During 2013, Life works Inc. Had $10,000 in sales commission, $12,750 in administrative costs of which $800

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Question:

During 2013, Life works Inc. Had $10,000 in sales commission, $12,750 in administrative costs of which $800 is fixed. Their selling price per unit was $45. direct materials was $10. direct labor $7. and variable overhead was $3.50. fixed overhead amounted to $7,500.

Prepare an income statement under absorption and variable costing if :

1. Sold unit 8,500 and produced unit 8,500

2. Sold unit 7,000 and produced unit 8,500

3. Sold unit 10,000 and produced unit 8,500

Explain.