The Octavius Company produces a 10-inch chef knife used by commercial chefs. The knives sell for $50
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Reconcile the difference in profit between the two income statements.
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Income Statement Prepared Using Variable Costing Octavius Company Income Statement For the Year Ending December 31, 2017 Sales $2,250,000 Less variable costs: Variable cost of goods sold Variable selling expense $650,000 150,000 800,000 Contribution margin 1,450,000 Less fixed costs: Fixed manufacturing expense Fixed selling expense Fixed administrative expense 600,000 150,000 100,000 850,000 $ 600,000 Net income Income Statement Prepared Using Full Costing Octavius Company Income Statement For the Year Ending December 31, 2017 Sales $2,250,000 Less cost of goods sold 1,190,000 Gross margin Less selling and administrative 1,060,000 expenses: Selling expense Administrative expense $300,000 400,000 100,000 $ 660,000 Net income
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Fixed manufacturing overhead 600000 Divided by units produced 50000 Fixed m...View the full answer
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