Course Content / Chapter 7 / Chapter 7 Variable and Absorption Costing Summarized data for the first year of operations for Gorman Products, Inc., are as follows: Sales (75,000 units) Production costs (80,000 units) Direct material Direct labor Manufacturing overhead: Variable Fixed Operating expenses: $7,500,000 2,200,000 1,800,000 1,360,000 800,000 Variable 420,000 Fixed 600,000 Depreciation on equipment 150,000 Real estate taxes 45,000 Personal property taxes (inventory & equipment) 72,000 Personnel department expenses 75,000 Chapter 7 a. Prepare an income statement based on full absorption costing. Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. Absorption Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory Direct materials Direct labor $ OOOO 5 0 0 = 0 Less: Ending Inventory 0 Cost of Goods Sold 0 0 + 0 Net Income (Loss) $ 0 b. Prepare an income statement based on variable costing. Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. Variable Costing Income Statement Sales $ 0