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Exercise 06-5 Absorption costing and variable costing income statements LO P2 Rey Company's single Product sells at a price of $232 per unit. Data for its single product for its first year of operations follow. 36 per unit 44 per unit Direct materials Direct labor Overhead costs Variable overhead Fixed overhead per year Selling and administrative expenses Variable Fixed Units produced and sold $ B per unit $ 255,000 per year $ 34 per unit $ 232,000 per year 25,500 units 1. Prepare an income statement for the year using absorption costing 2. Prepare an income statement for the year using variable costing. 3 Required 1 Required 2 Prepare an income statement for the year using absorption costing 5 points 5,916,000 REY COMPANY Absorption Costing Income Statement Sales Less: Cost of goods sold Direct materials $ 918,000 Direct labor 1.122,000 Variable overhead costs 867,000 Fixed overhead costs 255,000 3,162,000 2,754,000 3 Cost of goods sold Gross margin Selling general and administrative expenses Variable selling and administrative expenses Fixed selling and administrative costs 816,000 232,000 Total selling general and administrative expenses Net income (loss) 1,048,000 1.706,000 3 Required 1 Required 2 Prepare an income statement for the year using variable costing. $ 5,916,000 REY COMPANY Variable Costing Income Statement Sales Less: Variable costs Direct materials $ 918,000 Direct labor 1,122,000 Variable overhead costs 867,000 Variable selling and administrative expenses 816,000 >>> 3,723,000 2,193,000 Total variable costs Contribution margin Less: Fixed expenses Fixed overhead costs Fixed selling and administrative costs >> 255,000 232,000 Total fixed expenses Net income (loss) 487,000 $ 1,706,000