Required intormation

Exercise $19-3($Algo$)$ Income statement under absorption costing and variable costing LO P$1,$ P$2$

$[$The following information applies to the questions displayed below.$]$

Cool Sky reports the following for its first year of operations. The company produced $40,000$ units and sold $32,000$ units at a price of $$140$ per unit.

Direct materials

Direct labor

Variable overhead

Fixed overhead

Variable selling and administrative expenses

Fixed selling and administrative expenses

$$60$ per unit

$$22$ per unit

$$8$ per unit

$$480,000$ per year

$$10$ per unit

$$110,000$ per year

Exercise $19-3($Algo$)$ Part $2$b

$2$b$.$ Assume the company uses variable costing. Prepare its income statement for the year under variable costing.

$\backslash$table$[[$Income Statement $($Variable Costing$),],[$Sales$,,],[$Less: Variable expenses,,$],[$Variable cost of goods sold,,$],[$Variable selling and administrative expenses,,$],[$Variable$\text{'}$ selling and administrative expenses,,$],[$Contribution margin,,$],[$Less: Fixed expenses,,$],[$Fixed overhead,,$],[$Fixed selling and administrative expenses,,$],[$Variable selling and administrative expenses,,$],[$Income$,,]]$