Asian Windows manufactures a hand-painted bamboo window shade for standard-size windows. Production and sales data for 2012 are as follows:
Variable manufacturing costs ....................................... $40 per shade
Fixed manufacturing costs ..........................................$100,000
Variable selling and administrative expenses ................... $9 per shade
Fixed selling and administrative expenses ...................... $250,000
Selling price ......................................................... $90 per shade
Units produced ..................................................... 10,000 shades
Units sold ........................................................... 8,500 shades
Instructions
(a) Prepare an income statement using absorption costing.
(b) Prepare an income statement using variable costing.