Allerdyce Corporation Ltd. (ACL) prepares external financial statements using absorption costing and internal financial statements using variable

Question:

Allerdyce Corporation Ltd. (ACL) prepares external financial statements using absorption costing and internal financial statements using variable costing. You have the following information for the operations of ACL for the past two years:
Allerdyce Corporation Ltd. (ACL) prepares external financial statements using absorption

Instructions
(a) Prepare absorption-costing income statements for the years ended December 31, 2011, and 2012. Include a column for totals for the two years.
(b) Prepare variable-costing income statements for the years ended December 31, 2011, and 2012. Include a column for totals for the two years.
(c) Reconcile the year-to-year differences in net income under the absorption-costing and variable-costing methods?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Managerial Accounting Tools for Business Decision Making

ISBN: 978-1118033890

3rd Canadian edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly

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