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	$	30	per unit
Direct labor	$	50	per unit
Overhead costs
Variable	$	20	per unit
Fixed	$	8,400,000	(per year)
Selling and administrative costs for the year
Variable	$	725,000
Fixed	$	4,250,000
Production and sales for the year
Units produced		105,000	units
Units sold		75,000	units
Sales price per unit	$	360	per unit

1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing.

Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the year using variable costing. SIMS COMPANY Variable Costing Income Statement Sales Less: Variable costs Direct materials Direct labor Variable overhead costs Variable selling and administrative expenses Total variable costs Contribution margin Less: Fixed expenses Fixed overhead costs Fixed selling and administrative costs Fixed overhead costs Net income (loss) Complete this question by entering your answers in the tabs below. Required 1 Required 2. Prepare an income statement for the year using absorption costing. SIMS COMPANY Absorption Costing Income Statement Net income (loss)