Variable and Absorption Costing Summarized data for 2016 (the first year of operations) for Gorman Products, Inc., are as follows: $3,000,000 880,000 720,000 544,000 320,000 Sales (75,000 units) Production costs (80,000 units) Direct material Direct labor Manufacturing overhead: Variable Fixed Operating expenses: Variable Fixed Depreciation on equipment Real estate taxes Personal property taxes (inventory & equipment) Personnel department expenses b. Prepare an income statement based on variable costing. Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. Variable Costing Income Statement Sales $ 3,000,000 Variable cost of Goods Sold: Beginning Inventory $ 0 Direct materials 880,000 Direct labor 720,000 Variable manufacturing overhead 544,000 Less: Ending Inventory 134,000 Variable cost of goods sold 2,010,000 Variable operating expenses 168,000 Contribution margin 822,000 Fixed costs: Manufacturing overhead 320,000 Operating expenses 240,000 Total Fixed Cost 560,000 Net Income (Loss) $ 262,000 168,000 240,000 60,000 18,000 28,800 30,000 a. Prepare an income statement based on full absorption costing. Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. . $ 3,000,000 C. Assume that you must decide quickly whether to accept a special one-time order for 1,000 units for $30 per unit. Which income statement presents the most relevant data? variable costing Determine the apparent profit or loss on the special order based solely on these data. Use a negative sign with your answer if the special order creates an apparent loss. Round answer to the nearest whole number. $ 960 X Absorption Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory $ 0 Direct materials 880,000 Direct labor 720,000 Manufacturing overhead 864,000 Less: Ending Inventory 154,000 Cost of Goods Sold Gross profit Operating expenses Net Income (Loss) d. If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss? Why? Select the most appropriate statement. Absorption costing approach because the cost should include a reasonable portion of fixed manufacturing costs. Variable costing approach because the cost should include a reasonable portion of fixed manufacturing costs. 2.310,000 690,000 408,000 $ 282,000