Income Statements, Variable and Absorption Costing

The following information pertains to Vladamir, Inc., for last year:

Beginning inventory, units		1,400
Units produced		100,000
Units sold		101,000
Variable costs per unit:
Direct materials		$8.00
Direct labor		$9.00
Variable overhead		$1.00
Variable selling expenses		$2.00
Fixed costs per year:
Fixed overhead		$300,000
Fixed selling and administrative expenses		$230,000

There are no work-in-process inventories. Normal activity is 100,000 units. Expected and actual overhead costs are the same. Costs have not changed from one year to the next.

Required:

1. How many units are in ending inventory?

2. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income.

3a. Assume the selling price per unit is $30. Prepare an income statement using variable costing.

Vladamir, Inc.
Variable-Costing Income Statement
For Last Year
	$
Less:
Contribution margin	$
Less:
Operating income	$

3b. Assume the selling price per unit is $30. Prepare an income statement using absorption costing.

Vladamir, Inc.
Absorption-Costing Income Statement
For Last Year
	$
Gross profit	$
Operating income	$