Exercise 19-3 Income reporting under absorption costing and variable costing LO P2

Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows.

Manufacturing costs
Direct materials	$	35	per unit
Direct labor	$	55	per unit
Overhead costs for the year
Variable overhead	$	3,000,000
Fixed overhead	$	7,000,000
Selling and administrative costs for the year
Variable	$	750,000
Fixed	$	4,250,000
Production and sales for the year
Units produced		100,000	units
Units sold		70,000	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. 3. Under what circumstance(s) is reported income identical under both absorption costing and variable costing?

Attention: I have this question incorrect on the problem.

Hi. It says that answer for required 1: Variable overhead: 3,000,000 is incorrect. Sales is also incorrect. Contribution margin: 15,150,000 is incorrect. And last Net income (loss): 3,900,000 is also incorrect.

Also answer for requited 2: Variable overhead costs is incorrect: 3,000,000. Fixed overhead costs: 4,900.000 is incorrect. Gross margin: 11,000,000. And last Net income (loss): 6,000,000 is also incorrect.