Precision Audio Electronics Inc. Assembles and sells CD players. The company began operations on May 1 and operated at 100% capacity during the first month.
The following data summarizes the results for the month of May:
Sales (15,000 units)			$2,400,000
Cost of production (18,000 units)
	Direct materials		$990,000
	Direct labour		$540,000
	Variable indirect production costs	$225,000
	Fixed indirect production expenses	$153,000
Sales and administrative expenses:
	Variable sales and administrative expenses	$270,000
	Fixed sales and administrative expenses	$84,200
to. Prepare an income statement according to the absorption costing method.
b. Prepare an income statement according to the variable costing method.
c. What is the reason for the difference in the amount of operating income reported in (a) and (b)?

Answer rating: 100% (QA)

a Income Statement Absorption Costing Method Precision Audio Electronics Inc Income Statement Absorption Costing Method For the Month Ended May 31 Sal... View the full answer