Estimated Income Statements, using Absorption and Variable Costing

Prior to the first month of operations ending January $31,$ Lemke Inc. estimated the following operating results:

Line Item Description Amount

Sales $(25,000\backslash$times $$80)$ $$2,000,000$

Manufacturing costs $(25,000$ units$)$:

Direct materials $450,000$

Direct labor $750,000$

Variable factory overhead $50,000$

Fixed factory overhead $300,000$

Fixed selling and administrative expenses $75,000$

Variable selling and administrative expenses $200,000$

The company is evaluating a proposal to manufacture $30,000$ units instead of $25,000$ units, thus creating an ending inventory of $5,000$ units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.

Question Content Area

a$.1.$ Prepare an estimated income statement, comparing operating results if $25,000$ and $30,000$ units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank.