Question 36 Basic Electric Motors is a division of Basic Electric Products Corporation. The division manufactures and sells an electric switch used in a wide variety of applications. During the coming year, it expects to sell 180,000 units for $8 per unit. Ester Madden is the division manager. She is considering producing either 180,000 or 280,000 units during the period. Other information is as follows: Division Information for 2020 Beginning inventory Expected sales in units Selling price per unit Variable manufacturing cost per unit Fixed manufacturing cost (total) Fixed manufacturing overhead costs per unit 0 180,000 $8 $2.70 $504,000 $2.80 per unit ($504,000 180,000) $1.80 per unit ($504,000 280,000) Based on 180,000 units Based on 280,000 units Manufacturing cost per unit Based on 180,000 units Based on 280,000 units $5.50 per unit ($2.70 variable $2.80 fixed) $4.50 per unit ($2.70 variable + $1.80 fixed) $0.50 per unit Variable selling and administrative expenses Fixed selling and administrative expenses (total) $11,100 Your answer is correct. Prepare an absorption-costing income statement, with one column showing the results if 180,000 units are produced and one column showing the results if 280,000 units are produced BASIC ELECTRIC MOTORS DIVISION Income Statement For the Year Ended 2020 Absorption Costing Units produced 280,000 180,000 Units sold 180000 180000 Sales 1440000 1440000 Cost of goods sold Less Gross profit Less . 810000 990000 630000 450000 Selling and administrative expenses 101100 101100 Net income 528900 348900 Prepare a variable-costing income statement, with one column showing the results if 180,000 units are produced and one column showing the results if 280,000 units are produced. BASIC ELECTRIC MOTORS DIVISION Income Statement For the Year Ended 2020 Variable Costing Units produced 280,000 180,000 Units sold