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Houston Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per
Houston Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expense $2 $3 $4 $1 $3,000 $1,500 During its first year of operations, Houston produced 500 units and sold 500 units. During its second year of operations, it produced 800 units and sold 500 units. In its third year, Houston produced 400 units and sold 700 units. The selling price of the company's product is $20 per unit. Assume the company uses absorption costing. Prepare an income statement for Year 1, Year 2, Year 3. Assume the company uses absorption costing. Prepare an income statement for Year 1, Year 2, Year 3 Year 1 Year 2 Year 3 Sales Cost of goods sold Gross margin Selling & Adm. expenses Net income Assume the company uses variable costing. Prepare an income statement for Year 1, Year 2, Year 3. Year 1 Year 2 Year 3 Sales Variable expenses: Variable CGS Variable Selling & Adm. Contribution margin Fixed expenses: Fixed MOH Fixed Selling & Adm. Net income
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