Exercise 19-5 Absorption costing and variable costing income statements LO P2

Rey Companys single product sells at a price of $236 per unit. Data for its single product for its first year of operations follow.

Direct materials	$	40	per unit
Direct labor	$	48	per unit
Overhead costs
Variable overhead	$	4	per unit
Fixed overhead per year	$	141,000	per year
Selling and administrative expenses
Variable	$	38	per unit
Fixed	$	240,000	per year
Units produced and sold		23,500	units

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

REY COMPANY
Absorption Costing Income Statement
Net income (loss)

REY COMPANY
Variable Costing Income Statement
		0
		0
Net income (loss)