Required:
(a)	Prepare an income statement using absorption costing.*
(b)	Prepare an income statement using variable costing.*
	*Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Less or Plus will automatically appear if it is required. You will not need to enter colons (:) on the financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Labels
Fixed costs
For Month Ended January 31, 20--
Amount Descriptions
Contribution margin
Cost of goods manufactured
Cost of goods sold
Fixed manufacturing costs
Fixed selling and administrative expenses
Gross profit
Income from operations
Inventory, January 31, 20--
Manufacturing margin
Sales
Selling and administrative expenses
Variable cost of goods manufactured
Variable cost of goods sold
Variable selling and administrative expenses

Prepare an income statement using absorption costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Less or Plus will automatically appear if it is required. You will not need to enter colons (:) on the financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Townsend Co.

Absorption Costing Income Statement

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2	Cost of goods sold:
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Prepare an income statement using variable costing. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Less or Plus will automatically appear if it is required. You will not need to enter colons (:) on the financial statements. If a net loss is incurred, enter that amount as a negative number using a minus sign.

Townsend Co.

Variable Costing Income Statement

1
2	Variable cost of goods sold:
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