Problem 4: Absorption vs. Variable Costing

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

	Selling price	$160
	Units in beginning inventory	0
	Units produced	6,800
	Units sold	6,500
	Variable costs per unit:
	Direct materials	$51
	Direct labor	$40
	Variable manufacturing overhead	$7
	Variable selling and administrative	$12
	Fixed costs:
	Fixed manufacturing overhead	$88,400
	Fixed selling and administrative	$81,300

Prepare the Income Statement using Absorption Costing

Prepare the Income Statement using Variable Costing