Exercise 06-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials Direct labor Overhead costs Variable AA 35 per unit 55 per unit Fixed $ 30 per unit (per $7,700,000 year) $ 725,000 $4,000,000 Selling and administrative costs for the year Variable Fixed Production and sales for the year Units produced Units sold Sales price per unit 110,000 units 80,000 units 350 per unit 1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing. Required 1 Required 2. Prepare an income statement for the year using variable costing. SIMS COMPANY Variable Costing Income Statement $ 28,000,000 Sales Less: Variable costs Direct materials $ 2,800,000 4,400,000 Direct labor Variable overhead costs 2,400,000 Variable selling and administrative expenses 2,000,000 Total variable costs 11,600,000 Contribution margin 13,600,000 Less: Fixed expenses Fixed selling and administrative costs Fixed overhead costs Net income (loss) Required 1 Required 2 Prepare an income statement for the year using absorption costing. SIMS COMPANY Absorption Costing Income Statement Net income (loss)