Adeline Manufacturing manufactures a single product. Cost, sales, and production information for the company and its single
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Adeline Manufacturing manufactures a single product. Cost, sales, and production information for the company and its single product is as follows:
• | Sales price per unit $40 |
• | Variable manufacturing costs per unit manufactured (DM, DL and variable MOH) $21 |
• | Variable operating expenses per unit sold $1 |
• | Fixed manufacturing overhead (MOH) in total for the year $160,000 |
• | Fixed operating expenses in total for the year $49,000 |
• | Units manufactured during the year 16,000 units |
• | Units sold during the year 12,500 units |
1. | Prepare an income statement for the upcoming year using variable costing. |
2. | Prepare an income statement for the upcoming year using absorption costing. |
3. | What causes the difference in income between the two methods? |
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