The following information was drawn from the records of Baldwin Company:

During the most recent month, Baldwin produced 4,000 units of product and sold 3,800 units of product at a sales price of $108 per unit.

Required
a. Prepare an income statement for the month using absorption costing.
b. Prepare an income statement for the month using variable costing.
c. Explain why a company might use one type of income statement for external reporting and a different type for internalreporting.

Transcribed Image Text:

Variable costs (per unit) Fixed costs (in total) $24 Manufacturing overhead $48,000 Direct materials Direct labor Manufacturing overhead Selling and administrative 18 eing and administrative 52,000 6 14