8 B 1 See Absorption vs Variable Costing Daily Activity 2 3 Rainbow Concrete Corporation has provided the following data for its two most recent years of operation: 4 5 6 Selling price per unit $88 7 8 Manufacturing costs: 9 Variable manufacturing cost per unit produced: 10 Direct materials 16 11 Direct labor 12 12 Variable manufacturing overhead 13 Fixed manufacturing overhead per year 396,000 14 Selling and administrative expenses: 15 Variable selling and administrative expense per unit sold 16 Fixed selling and administrative expense per year 124,000 17 18 Year 1 Year 2 19 Units in beginning inventory 0 6,000 20 Units produced during the year 18,000 12,000 21 Units sold during the year 12,000 15,000 22 Units in ending inventory 6,000 3,000 23 24 Complete (a) through e) 25 26 (a). Assume the company uses absorption costing. Compute the unit product cost in each year. 27 28 Year 1 Year 2 29 8 30 31 32 33 34 35 36 37 (6). Assume the company uses absorption costing. Prepare an income statement for each year. 38 39 Year 1 40 41 Year 2 42 43 44 45 46 47 48 49 50 C. Assume the company uses variable costing. Compute the unit product cost in each year. 51 52 Year 1 53 54 55 56 Year 2 Year 2 62 d. Assume the company uses variable costing. Prepare an income statement for each year. 63 64 Year 1 65 66 67 68 69 70 71 72 73 74 75 76 e. Prepare a report in good form reconciling the variable costing and absorption costing net incomes. 77 78 Year 1 Year 2 79 80 81 82 83 Year 1 Year 2 84 85 86 87