E7- 3B: Variable and Absorption CostingService Company Tech Helpers Company prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Tech Helpers provides a personal computer maintenance service that is sold for $100. The variable and fixed cost data are as follows:

Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25.00

Overhead:

Variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.00

Fixed cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $240,000

Marketing, general, and administrative:

Variable cost (per service contract completed) . . . . . . . . . . . . . . . . . $ 5.00

Fixed cost (per month) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,000

During 2015, 4,000 service contracts were started and 5,000 service contracts were completed. At the beginning of 2016, Tech Helpers had 1,000 service contracts in process at a per-unit cost of $90 in beginning work-in-process inventory.

Required

a. Calculate reported income for management.

b. Calculate reported income for the bank.

c. Reconcile the two income amounts.