Sprinkles Company:

a) Prepare both an Absorption & Variable Costing Income Statement, given the following: (Provide computations or excel attachment)

Total units= 85,000 kg

Consumer Price (including VAT): 148.20, Value Added Tax (25% of consumer price before tax): 29.64, Consumer Price before tax: 118.56, Retailer's Margin (27.5% of price to retailer): 25.57, UNIT PRICE to Retailer: 92.99

Cake Material: 10.67, Cake Labor: 10.25, Toppings Material: 5.55, Toppings Labor: Cabbage: 5.45, Packaging: 10.26, Transportation & Storage: 6.20, Margins & Discounts to Wholesalers (8% of price to retailer): 7.44, Sundry other variable costs: 8.10, Production Fixed Expenses ($10 per kilogram): 10.00, Advertising Expenses: 3.30, SG&A Expenses (4% of price to retailer): 3.72

Total Unit Cost: 80.94 , Margin per Unit: 12.05

b) Explain why Net income is different.