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Exercise $11-16$A $($Algo$)$ Variable costing versus absorption costing LO $11-4$

Finch Company incurred manufacturing overhead cost for the year as follows.

Direct materials

Direct labor

Manufacturing overhead

Variable

Fixed $($ $$\frac{18\mathrm{.}40}{?}$ unit for $1,100$ units$)$

Variable selling and administrative expenses

Fixed selling and administrative expenses

$$\frac{38\mathrm{.}20}{?}$ unit

$$\frac{26\mathrm{.}40}{?}$ unit

$$\frac{10\mathrm{.}80}{?}$ unit

$$20,240$

$$3,900$

$$15,900$

The company produced $1,100$ units and sold $600$ of them at $$181\mathrm{.}30$ per unit. Assume that the production manager is paid a $3$ percent bonus based on the company's net income.

Required

a$.$ Prepare an income statement using absorption costing.

b$.$ Prepare an income statement using variable costing.

c$.$ Determine the manager's bonus using each approach. Which approach would you recommend for internal reporting?

Complete this question by entering your answers in the tabs below.

Required A

Required B

Required C

Prepare an income statement using absorption costing.

$\backslash$table$[[$FINCH COMPANY$],[$Income Statement$],[($Absorption Costing$)],[$Cost of goods Sold,$],[,],[,],[,],[,]]$

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$12$ of $12$

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Complete this question by entering your answers in the tabs below.

Required A

Required B

Required C

Prepare an income statement using absorption costing.

$\backslash$table$[[$FINCH COMPANY$],[$Income Statement$],[($Absorption Costing$)],[$Cost of goods Sold,$],[,],[,],[,],[,],[,],[,0],[,$$ $0],[,],[,],[,$$ $0]]$

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$12$ of $12$

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interna reportings

Complete this question by entering your answers in the tabs below.

Required A

Required B

Rpquired C

Prepare an income statement using variable costing.

$\backslash$table$[[$FINCH COMPANY$],[$Income Statement$],[($Variable Costing$)],[$Variable costs,$],[,],[,],[,],[,],[,],[,],[,],[,],[,],[,],[,],[,$$ $0]]$

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$12$ of $12$

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$\backslash$table$[[$Direct labor,$ $26\mathrm{.}40/$unit$],[$Manufacturing overhead$],[$Variable$,$$ $10\mathrm{.}80/$unit$],[$Fixed $($$$18\mathrm{.}40/$unit for $1,100$ units$),$$ $20,240],[$Variable selling and administrative expenses,$ $3,900],[$Fixed selling and administrative expenses,$ $15,900]]$

The company produced $1,100$ unit and sold $600$ of them at $$181\mathrm{.}30$ per unit. Assume that the production manager is paid a $3$ percent bonus based on the company's net income.

Required

a$.$ Prepare an income statement using absorption costing.

b$.$ Prepare an income statement using variable costing.

c$.$ Determine the manager's bonus using each approach. Which approach would you recomme internal reporting?

Complete this question by entering your answers in the tabs below.

Required A Required B Required C

Determine the manager's bonus using each approach. Which approach would you recommend for in your intermediate calculations and final answers to the nearest whole dollar amount.$)$

$\backslash$table$[[$Absorption costing,$],[$Variable costing,$],[$Which approach is recommended?,$]]$

$$

Prey

$12$ of $12$

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