Variable and Absorption Costing$-$Service Company

Lawn RX$,$ Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care service that is sold for $$175.$ The variable and fixed cost data are as follows:

Direct labor $$100\mathrm{.}00$

Overhead

Variable cost per unit $$23\mathrm{.}00$

Fixed cost $$100,000$

Marketing, general and administrative

Variable cost $($per service contract completed$)$ $$24\mathrm{.}00$

Administrative expenses $($fixed$-$ per month$)$ $$42,000$

During $2016,10,000$ service contracts were signed and $9,500$ service contracts were completed. Lawn RX had no service contracts at the beginning of the year.

a$.$ Calculate reported income for management.

Do not use negative signs with any answers.

Absorption Costing Income Statement

Sales Answer

Cost of Goods Sold:

Beginning Inventory Answer

Variable Costs Answer

Fixed Cost Answer

Less: Ending Inventory Answer

Cost of Goods Sold Answer

Answer

Answer

Answer

Answer

Administrative expense Answer

Net Income Answer

b$.$ Calculate reported income for the bank.

Do not use negative signs with any answers.

Variable Costing Income Statement

Sales Answer

Cost of Goods Sold:

Beginning Inventory Answer

Variable Costs Answer

Answer

Answer

Variable cost of goods sold Answer

Answer

Answer

Answer

Answer

Fixed costs:

Answer

Answer

Administrative Expense Answer

Total Fixed Cost Answer

Net Income Answer