The chief executive officer (CEO) of Button Corporation attended a conference in which one of the sessions
Question:
The chief executive officer (CEO) of Button Corporation attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that the following data of Button Corporation be used to prepare comparative statements using variable costing and the company’s absorption costing. The data follow:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 90,000
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Variable factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Fixed factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Fixed marketing and administrative expense . . . . . . . . . . . . . . . . . . . . . . . . . 180,000
The factory produced 80,000 units during the period, and 70,000 units were sold for $700,000.
1. Prepare an income statement using variable costing.
2. Prepare an income statement using absorption costing.
(Round unit costs to three decimal places.)
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer: