Exercise 19-7 Income reporting under absorption costing and variable costing LO P2

[The following information applies to the questions displayed below.] Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.

Sales price per unit	$	310	per unit
Units produced this year		115,000	units
Units sold this year		118,500	units
Units in beginning-year inventory		3,500	units
Beginning inventory costs
Variable (3,500 units $140)	$	490,000
Fixed (3,500 units $80)		280,000
Total	$	770,000
Manufacturing costs this year
Direct materials	$	44	per unit
Direct labor	$	66	per unit
Overhead costs this year
Variable overhead	$	3,400,000
Fixed overhead	$	7,400,000
Selling and administrative costs this year
Variable	$	1,450,000
Fixed		4,400,000

Exercise 19-7 Part 2

2. Prepare the current year income statement for the company using absorption costing.

OAK MART COMPANY
Absorption Costing Income Statement
Beginning inventory
Manufacturing costs this year
Net income (loss)
Fixed costs added to(subtracted from) inventory