Absorption Costing Versus Variable Costing. Prime, Inc., produces tricycles. The company has no finished goods inventory at
Question:
Absorption Costing Versus Variable Costing. Prime, Inc., produces tricycles. The company has no finished goods inventory at the beginning of year 1. The following information pertains to Prime, Inc.
Required:
All 60,000 units produced during year 1 are sold during year 1.
Prepare a traditional income statement assuming the company uses absorption costing.
Prepare a contribution margin income statement assuming the company uses variable costing.
Although 60,000 units are produced during year 2, only 40,000 are sold during the year. The remaining 20,000 units are in finished goods inventory at the end of year 2.
Prepare a traditional income statement assuming the company uses absorption costing.
Prepare a contribution margin income statement assuming the company uses variable costing.
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson