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

Required:

1. Prepare absorption and variable costing income statements for the years ended December 31, 20X1 and 20X2. Include a column for totals for the two years.

2. Reconcile the differences in net income under the two methods.

Transcribed Image Text:

20X1 20X2 40,000 35,000 30 Sales in units (@ $40 per unit) 30,000 35,000 Production in units Variable production costs per unit Fixed production costs Fixed marketing costs |Beginning inventory 2$ 30 $105,000 $105,000 $ 60,000 $ 60,000