Exercise 6-3 Income reporting under absorption costing and variable costing LO P2

Sims Company, a manufacturer of tablet computers, began operations on January 1, 2015. Its cost and sales information for this year follows.

Manufacturing costs
Direct materials	$	30	per unit
Direct labor	$	50	per unit
Overhead costs for the year
Variable overhead	$	3,300,000
Fixed overhead	$	7,700,000
Selling and administrative costs for the year
Variable	$	750,000
Fixed	$	4,000,000
Production and sales for the year
Units produced		110,000	units
Units sold		80,000	units
Sales price per unit	$	360	per unit

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