the east coast company has built a massive water-desalting factory next to atlantic ocean. the factory is completely automated. it has its own source of power, light, heat and so on. the salt water costs not nothing . its has both variable and fixed manufacturing costs its variable cost are $0.14 per litre and its fixed manufacturing costs are $385,000 per year. the desalted water is not sold to household consumers. it has a special taste that appeals to local breweries, distilleries and soft-drink manufacturers. the price,$0.60 per litre, is expected to remain unchanged for quite sometime. the following are data regarding the first two years of operations: in liters total costs sales production manufacturing other 2010 1,750,000 3,500,000 $ 385,000 $195,000 2011 1,750,000 0 $ 385,000 $195,000 sales(1,750,000 for both years) & production3,500,00 in 2010 and 0 in 2011) are in litres and manufacturing($ 385,000 for both years) and other ($195,000)are in cost 1. prepare three-column income statements for 2010, for 2011 and for the two years together using (a) variable costing and (b) absorption costing- begin by preparing the three column income statement with option 1, if normal capacity was the production units in 2010; then prepare the three-column income statement with option 2, if normal capacity was the units sold ( if there is not a cost, leave the cell blank. use parentheses or a minus sign for overapplied overhead amounts and nets losses. round all interim calculations to the nearest cent. rounding you final answers to the nearest whole dollar.) 1(b) option 1 option 2 2010 2011 total 2010 2011 total sales less cost of goods sold: beginning inventory cost of goods manufactured cost of goods available for sale ending inventory cost of goods sold-at normal cost underappled overhead- overappled overhead- other expenses total charges net income(loss) 2. what inventory costs would be carried on the balance sheet at december 31, 2010 and december 31, 2011, under each method?

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a Variable Costing 2010 2011 Total Sales 1750000 1750000 3500000 Less Cost of Goods Sold Beginning ... View the full answer