Question

The chief executive officer of Richards Corp. attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that the following data of Richards Corp. be used to prepare comparative statements using variable costing and the company's absorption costing. The data follow:
Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 90,000
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Variable factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Fixed factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Fixed marketing and administrative expense . . . . . . . . . . . . . ..... 180,000
The factory produced 80,000 units during the period, and 70,000 units were sold for $700,000.
1. Prepare an income statement using variable costing.
2. Prepare an income statement using absorption costing.
(Round unit costs to three decimal places.)




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  • CreatedMay 05, 2014
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